tthh 4488 AAnnualnnual ReportReport 22013-2014013-2014
MMADRASADRAS FERTILIZERSFERTILIZERS LLIMITEDIMITED Board of Directors
Dr. I VIJAYAKUMAR, IRS CHAIRMAN AND MANAGING DIRECTOR
Madras Fertilizers LImited, Manali Plant
SHRI RAJIV YADAV, IAS SHRI K.M. GUPTA, IES Additional Secretary and Financial Advisor, DOF Economic Advisor, DOF Executives of the Company
SHRI MOHAMMED HASSAN GHODSI SHRI AHMAD AZMOODEH SHRI MOHAMMAD ALI AHMADI NICO Director NICO Director NICO Director SHRI N MURALI KRISHNA, ITS Chief Vigilance Offi cer
SHRI C.M.T. BRITTO CA. MUKESH MOHAN GUPTA SHRI D SUNDARASEKARAN SHRI H GUNASEKARAN SHRI V MURALIDHARAN Director - Technical (Additional Charge) BIFR Nominee Director General Manager (Plant) General Manager (P & A) General Manager (F & A) and Company Secretary MADRAS FERTILIZERS LIMITED
BOARD OF DIRECTORS Chairman & Managing Director Dr I Vijayakumar, IRS
Directors Shri Rajiv Yadav, IAS Shri K M Gupta, IES Shri C M T Britto Shri Mohammed Hassan Ghodsi Executives Shri Ahmad Azmoodeh Dr I Vijayakumar, IRS Shri Mohammad Ali Ahmadi Chairman & Managing Director CA Mukesh Mohan Gupta Shri C M T Britto Board Sub Committee / Management Committee Director – Technical (Addl. Charge) Dr I Vijayakumar, IRS Shri Rajiv Yadav, IAS Shri N Murali Krishna, ITS Chief Vigilance Offi cer Shri K M Gupta, IES Shri Ahmad Azmoodeh Shri D Sundarasekaran CA Mukesh Mohan Gupta General Manager (Plant)
Audit Committee Shri H Gunasekaran Shri Rajiv Yadav, IAS General Manager (P&A) Shri K M Gupta, IES Shri V Muralidharan Shri Mohammed Hassan Ghodsi General Manager (F&A) and Shri Mohammad Ali Ahmadi Company Secretary CA Mukesh Mohan Gupta
Shareholders & Investors Grievance Committee Dr I Vijayakumar, IRS Shri C M T Britto Shri Ahmad Azmoodeh CA Mukesh Mohan Gupta
48th Annual Report 2013 - 14 1 MADRAS FERTILIZERS LIMITED
CONTENTS
Page No AGM Notice 3 Directors’ Report 7 Report on Corporate Governance 18 Review of Accounts by the C & AG 25 Independent Auditor’s Report 28 Balance Sheet 33 Statement of Profi t & Loss 35 Notes to Financial Statement 37 Cash Flow Statement 60 Information to Investors 62
Registered Offi ce Manali, Chennai – 600 068 Tamil Nadu, India
Principal Bankers State Bank of India State Bank of Patiala State Bank of Hyderabad
Auditors B Thiagarajan & Co. Chartered Accountants VIGFIN HOUSE Old No. 15, New No. 24, Yogambal Street, T. Nagar, Chennai - 600 017.
48th Annual Report 2013 - 14 2 MADRAS FERTILIZERS LIMITED
Madras Fertilizers Limited (A Government of India Undertaking) CIN - L32201TN1966GOI005469 Regd Offi ce: Post Bag No.2, Manali, Chennai – 600 068. Tel : 25942281 / 25945203 Fax : 25943613 Website : www.madrasfert.nic.in email : [email protected] NOTICE 5 To approve the remuneration of the Cost Auditors for the fi nancial year ending March 31, 2015 and in this regard NOTICE is hereby given that the 48th Annual General Meeting to consider and if thought fi t, to pass, with or without of Madras Fertilizers Limited will be held on September 29, 2014 modifi cation(s) the following resolution as an ORDINARY at MFL Training Centre Auditorium, (North Entrance Gate), MFL Resolution: Plant, Manali, Chennai – 600 068 at 2.30 PM to transact the following businesses:- “RESOLVED THAT the pursuant to the provisions of Section 148 and all other applicable provisions of the Companies Act ORDINARY BUSINESS 2013 and the Companies (Audit and Auditors) Rules, 2014 1 To receive, consider and adopt the Audited Balance Sheet (including any statutory modifi cation(s) or re-enactment of the Company as at March 31, 2014 and the Statement of thereof, for the time being in force) the remuneration of Profi t & Loss for the year ended on that date together with `.75,000/- (Rupees seventy fi ve thousand only) besides the Reports of Directors’ and the Auditors thereon. reimbursement of travelling and out of pocket expenses at actuals to be paid to Shri P R Tantri, Cost Auditor (Membership 2 To fi x remuneration of Statutory Auditors for the Financial No.2403) for conducting the audit of cost records of the Year 2014-15 and in this regard to consider and if thought Company for the fi nancial year ending March 31, 2015, as fi t to pass with or without modifi cation(s), the following approved by the Board of Directors on the recommendations resolution as an ORDINARY Resolution: of the Audit Committee.” “RESOLVED THAT pursuant to the provisions of Section By Order of the Board 142(1) and other applicable provisions, if any, of the Companies Act, 2013, the Statutory Audit Fee for the Chennai Dr I Vijayakumar fi nancial year 2014-15 be and is hereby fi xed at ` 3,00,000/- May 26, 2014 Chairman & Managing Director to M/s. B Thiagarajan & Co (Firm Regn. No.004371S), Statutory Auditors besides reimbursement of travelling and Notes : out of pocket expenses at actuals subject to other terms 1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE and conditions laid down by the C&AG in their letter No. ANNUAL GENERAL MEETING IS ENTITLED TO APPOINT CA. V/ COY/ CENTRAL GOVERNMENT, MFL(1)/66 dated A PROXY TO ATTEND AND VOTE ON A POLL INSTEAD 26.07.2012.” OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER SPECIAL BUSINESS OF THE COMPANY. 3 Appointment of Shri Rajiv Yadav (DIN 00322778) as Director The Proxy form, in order to be effective must be duly completed, stamped and lodged with the Registered Offi ce To consider and, if thought fi t, to pass with or without of the Company not less than forty eight hours before the modifi cation the following resolution as an ORDINARY commencement of the meeting. As per Section 105 of the Resolution: Companies Act, 2013, a person appointed as proxy can act “RESOLVED THAT Shri Rajiv Yadav, (DIN 00322778) be on behalf of members not exceeding fi fty and holding in the and is hereby appointed as Director of the Company” aggregate not more than 10% of the total share capital of the Company. 4 Appointment of Shri K M Gupta (DIN 06890585) as Director 2. During the beginning 24 hours before the time fi xed for To consider and, if thought fi t, to pass with or without the commencement of the meeting and ending with the modifi cation the following resolution as an ORDINARY conclusion of the meeting, a member would be entitled to Resolution: inspect the proxies lodged at any time during the business “RESOLVED THAT Shri K M Gupta, (DIN. 06890585) be hours of the company, provided that not less than 3 days of and is hereby appointed as Director of the Company” notice in writing is given to the Company.
48th Annual Report 2013 - 14 3 MADRAS FERTILIZERS LIMITED
3. Members/Proxies should bring the duly fi lled attendance slip 2. Click on Shareholder-Login attached with this notice to attend the meeting. 3. If you are already registered with NSDL for e-voting, then you 4. The Register of Members and Share Transfer Books of the can use your existing User ID and Password for Login. Company will remain closed from 23-09-2014 to 29-09-2014 (both days inclusive). 4. If you are logging in for the fi rst time, please enter the User ID and Password provided in this document. 5. M/s. Integrated Enterprises (India) Ltd, Kences Towers, II Floor, No.1, Ramakrishna Street, T Nagar, Chennai 60017 5. The Password Change menu will appear on your screen. are the Registrar and Transfer Agents and Depository Change in to a new Password of your choice, making sure Participants of the Company for physical / electronic shares that it contains a minimum of 8 digits or characters or a and all correspondences with regard to transfer of shares etc combination of the two. Please take utmost care to keep your may be addressed to them directly. Password confi dential. 6. The relevant records are available for inspection by the 6. Once the e-voting home page opens, click on e-voting>Active Shareholders at the Registered Offi ce of the Company at any Voting Cycles time during the working hours till the date of the meeting. 7. Select EVEN (E-voting Event Number) of Madras Fertilizers 7. Members may please note that NO GIFTS will be distributed Limited (the number is provided in this document). Once you at the meeting enter the number, the Cast Vote page will open. Now you are ready for e-voting. 8. Voting through electronic means: ii) Cast your vote by selecting your favoured option and click i) Pursuant to the provisions of Section 108 of the Companies Submit. Also click Confi rm when prompted. Please note that Act, 2013, read with the Companies (Management and once your vote is cast on the selected resolution, it cannot be Administration) Rules, 2014, the Company is pleased to modifi ed. offer e-voting facility to the members to cast their votes electronically on all resolutions set forth in the Notice iii) Institutional shareholders (i.e. other than individuals, HUF, convening the 48th Annual General Meeting (AGM) to be NRI etc.) are required to send a scanned copy (PDF/JPG held on Monday, 29th September 2014, at 2.30 p.m. IST. The format) of the relevant Board Resolution/ Authority letter etc. Company has engaged the services of National Securities together with the attested specimen signature(s) of the duly Depository Limited (NSDL) to provide the e-voting facility. authorized signatory(ies) who are authorized to vote, to the Scrutinizer via e-mail at: [email protected] with a copy The e-voting facility is available at the link https://www. marked to [email protected]. evoting.nsdl.com The electronic voting particulars are set out below: iv) In case of any queries, please refer to the Frequently Asked Questions(FAQs) for members and the e-voting user manual EVEN (e-voting event number) User ID Password for members available in the ‘Downloads’ section of https:// www.evoting.nsdl.com. You can also contact NSDL via email at [email protected]. The e-voting facility will be available during the following voting period: 8. General Instructions Commencement of e-voting End of e-voting a) The e-voting period commences on 23rd September 2014 (9.00 a.m. IST) and ends on 25th September 2014 (6.00 September 23, 2014 September 25, 2014 p.m. IST). During this period, shareholders of the Company at 9.00 a.m. IST at 6.00 p.m. IST holding shares either in physical form or in dematerialized Please read the instructions printed below before exercising form, as on the cut-off date (record date) of 22nd August your vote. 2014, may cast their vote electronically. The e-voting module shall also be disabled by NSDL for voting thereafter. Once These details and instructions form an integral part of the the vote on a resolution is cast by the shareholder, the Note for the Annual General Meeting to be held on 29th shareholder shall not be allowed to change it subsequently. September 2014. Steps for e-voting b) Since the Company is required to provide members the facility to cast their vote by electronic means, shareholders 1. Open the internet browser and type the following URL:https:// of the Company, holding shares either in physical form or in www.evoting.nsdl.com dematerialized form, as on the cut-off date (record date) of
48th Annual Report 2013 - 14 4 MADRAS FERTILIZERS LIMITED
22nd August 2014 and not casting their vote electronically, None of the Directors is interested in the resolution, except Shri may only cast their vote at the Annual General Meeting. Rajiv Yadav as it concerns his appointment. c) Shri B Sankaranarayanan, Practicing Company Secretary Item No.4 - Appointment of Shri K M Gupta, IES, as Director (Membership No. 8301) has been appointed as the Shri K M Gupta, IES, was nominated by the Government of India Scrutinizer to scrutinize the e-voting process in a fair and for appointment as Director in pursuance of Article 85 (a) and transparent manner. 86 read with Article 88 of the Articles of the Association of the d) The Scrutinizer shall, with in a period of not exceeding three Company in place of Shri V K Subburaj, IAS, Shri K M Gupta, working days from the conclusion of the e-voting period, was appointed as Director on the Board of the Company by the unlock the votes in the presence of at least two witnesses, not Board of Directors effective 1st May 2014. As per the provisions in the employment of the Company and make a Scrutinizer’s of Sec 161 of the Companies Act, 2013 and the Articles of Report of the votes cast in favour or against, if any, forthwith Association of the Company, Shri K M Gupta, will hold offi ce only to the Chairman of the Company. up to the date of Annual General Meeting. e) The voting rights of shareholders shall be in proportion A notice under section 160 of the Companies Act, 2013 has been to their shares of the paid up equity share capital of the received from a member proposing the appointment of Shri K M Company as on 22nd August 2014. Gupta, as a Director, liable to retire by rotation. f) The results will be declared on or after the AGM of the None of the Directors is interested in the resolution, except Shri Company. The results declared along with the Scrutinizer’s K M Gupta as it concerns his appointment. Report shall be placed on the Company’s website www. Item No.5 - Appointment of Cost Auditor for the year 2014-15 madrasfert.nic.in and on the website of NSDL within two days of the passing of the resolutions at the 48th Annual The Board at its 267th meeting held on May 24, 2013 approved General meeting of the Company on 29th September 2014 appointment of Shri P R Tantri, Cost Accountant as the Cost and communicated to the National Stock Exchange of India Auditor for the Financial Year 2013-14 at a remuneration of Ltd. ` 60,000/- excluding reimbursement of out of pocket expenses at actuals. All documents referred to in the accompanying Notice and the Statement pursuant to Section 102(1) of the Companies As per Sec. 148(3) of the Companies Act, 2013 read with Act, 2013, will be available for inspection at the Registered Companies (Cost Records and Cost Audit) Rules, 2013, the cost Offi ce of the Company during business hours on all working Auditor should be appointed by the Board on such remuneration days upto the dare of declaration of the result of the 48th which may be ratifi ed by the members in General Meeting. Annual General Meeting of the Company. Accordingly, the Board in its 273rd meeting held on May 26, 2014 The Explanatory Statement pursuant to Section 102 (1) of has approved the appointment of Shri P R Tantri, Cost Auditor, the Companies Act, 2013: for conducting the Cost Audit of the company for the year 2014- 15 at the remuneration of `75,000/- excluding reimbursement Item No.3 - Appointment of Shri Rajiv Yadav, IAS, as Director of out of pocket expenses at actuals. Shri P R Tantri has also Shri Rajiv Yadav, IAS, was nominated by the Government of communicated his willingness to take up the assignment. India for appointment as Director in pursuance of Article 85 (a) In accordance with the provisions of Sec 148(3) of the Companies and 86 read with Article 88 of the Articles of the Association of the Act, 2013 the remuneration fi xed for the Cost Auditor has to be Company in place of Shri Satish Chandra, IAS, Shri Rajiv Yadav, ratifi ed by the members in the General Meeting. Accordingly, was appointed as Director on the Board of the Company by the the above proposal has been submitted for ratifi cation of the Board of Directors effective 3rd July 2014. As per the provisions members. of Sec 161 of the Companies Act, 2013 and the Articles of Association of the Company, Shri Rajiv Yadav, will hold offi ce By Order of the Board only up to the date of Annual General Meeting. A notice under section 160 of the Companies Act, 2013 has been Chennai Dr I Vijayakumar received from a member proposing the appointment of Shri Rajiv May 26, 2014 Chairman & Managing Director Yadav, as a Director, liable to retire by rotation.
48th Annual Report 2013 - 14 5 MADRAS FERTILIZERS LIMITED
DETAILS OF DIRECTORS SEEKING APPOINTMENT / REAPPOINTMENT IN THE ANNUAL GENERAL MEETING (Pursuant to Clause 49 of Listing Agreement)
Particulars Shri Rajiv Yadav, IAS Shri K M Gupta, IES (DIN 00322778) (DIN 06890585) Date of Birth 21.01.1958 25.09.1957 Date of Appointment on the Board 03.07.2014 01.05.2014 Relationship with other Directors Nil Nil Expertise in Specifi c Functional areas Additional Secretary & Financial Adviser, Economic Adviser, Ministry of Chemicals & Ministry of Chemicals & Fertilizers, Fertilizers, Department of Fertilizers, Govt. Department of Fertilizers, Govt. of India, of India, New Delhi New Delhi Qualifi cation BE, IIT-Roorkee, M.Tech, IIT-New Delhi MA (Economics) MBA, The University of Hull (UK) Board Membership of other Companies Director (Part Time) at National Fertilizers Director, Fertilizers and Chemicals as on March 31, 2014 Ltd & Hindustan Organic Chemicals Ltd Travancore Ltd Chairman / Member of the Committee Chairman, Audit Committee Member, Audit Committee, Management of the Board of Directors of the Member, Board Sub-Committees Committee, Shareholders & Investors Company as on March 31, 2014 Grievance Committee Chairman / Member of the Committee of Directors of other Companies in which he is a director as on March 31, 2014 Audit Committee Chairman of Audit Committee at National Nil Fertilizes Ltd, Hindustan Organic Chemicals Ltd and Central Institute of Plastics Engineering & Technology (CIPET) Shareholders Grievance Committee Nil Nil Remuneration Committee Nil Nil Shareholding in the Company (as on Nil Nil 31/03/2014)
48th Annual Report 2013 - 14 6 MADRAS FERTILIZERS LIMITED
DIRECTORS’ REPORT PLANT PERFORMANCE During 2013-14, Urea production has reached an all time The Shareholders high of 486750 MT (100% capacity) with all time low energy Madras Fertilizers Limited consumption of 7.386 Gcal/MT. Main reason for the all time best Your Directors have pleasure in presenting herewith the 48th production combined with lowest energy is the consistent run of Annual Report together with the Balance Sheet as on March 31, Plants coupled with process trimmings. It is also the outcome of 2014 and the Profi t & Loss Statement for the year 2013-14. Plan Schemes and preventive maintenance jobs carried during the previous year. Further the Urea production has crossed day’s SUMMARY OF FINANCIAL RESULTS installed capacity (1475 MT) on 284 days. (` Cr) With respect to Complex fertilizers, MFL produced only 44860 2013-14 2012-13 MT of NPK 17-17-17 during 2013-14 compared to 100125 MT Turnover 2593.47 2346.29 during 2012-13 due to the following: Profi t Before Interest, Depreciation, 231.00 139.78 Under NBS Policy, the additional compensation for complex DRE and Tax fertilizers (17-17-17 & 20-20-0-13) by using costlier “N” from Interest 82.79 73.61 captive ammonia with Naphtha as feed stock was given to MFL upto March 2012 only. Effective April 2012 the same has not Depreciation 42.41 41.73 been given. So, MFL had to necessarily curtail the production of Extraordinary items (OTS benefi t) - - NPK so as to avoid substantial loss. Profi t / (Loss) Before Tax 105.80 24.44 In addition to that under NBS, the subsidy for the nutrients N,P,K Provision for Tax 5.76 - and S has been reduced from 1.4.2012 and again from 1.4.2013 Profi t / (Loss) After Tax 100.04 24.44 which has rendered the manufacture of above NPK grades Cash Profi t / (Loss) 142.45 66.17 unviable. The Company’s operations for the year ended with a profi t of GAS CONVERSION ` 100.04 Cr (Previous Year ` 24.44 Cr). The total accumulated MFL Ammonia Plant is gas compatible with minor modifi cations loss as of 31.3.2014 was ` 380.72 Cr. (Previous Year ` 480.76 Cr). in the Front End of the Ammonia Plant and the Basic Engineering SICKNESS AND REVIVAL Design Package has already been completed by M/s Haldor Topsoe A/S (HTAS), Denmark, MFL Ammonia Plant Process As mentioned in the earlier Annual Reports, the main reasons for Licensor. The detailed engineering is being carried out by M/s the continuous losses and consequent sickness was due to cost Projects & Development India Ltd. (PDIL) and is in the advanced and time overrun of revamp of Ammonia and Urea Plants, delay stage of completion. in stabilization of revamped Plants due to Technology related issues, higher energy, poor reliability, lack of maintenance of the Tenders for the major equipment viz., NG fi red heater, Primary existing Plant for want of funds and unfavorable Pricing policies Reformer Burners, NG Preheat Coil, NG fuel preheater, Pipings up to March 2009. & other instrument items were fl oated and under technical evaluation by M/s PDIL and as per PDIL, the project is expected The Company’s operation became profi table, thereafter, due to be completed by February 2015. to amendments in policies and improvement in production performance. The Company shall come out of sickness, once In the meantime, MFL is exploring all the possibilities of sourcing the draft rehabilitation scheme (DRS) is approved by DoF & BIFR Natural gas either from IOCL from their proposed Ennore LNG Terminal, which would become operational by the year 2017 and implemented. or from GAIL through KKMBPL (Kochi-Koottanad-Mangalore- DIVIDEND Bangalore pipeline) thru a spur line from Krishnagiri. As per GAIL, this project is likely to be implemented by the year 2017-18. Despite earning profi t during the year, Company could not pay Dividend to shareholders due to huge accumulated losses As per MFL’s Board direction, Heads of Agreement (HoA) was (`.380.72 Cr) and negative net worth (`.206.19 Cr) as on March signed with IOCL on September 17, 2013, for supply of Natural 31, 2014. Gas to MFL.
48th Annual Report 2013 - 14 7 MADRAS FERTILIZERS LIMITED
MARKETING PERFORMANCE next three years and issued the Certifi cate on 30th December 2013. Fertilizer Sales During the year, Company has sold 5.45 lakh MT of fertilizers Internal Audit – 18 for QMS & EMS were conducted at Regional as compared to 5.26 lakh MT last year. Considering the adverse Offi ces and Head Offi ce during the period from February 11 to seasonal conditions in Tamilnadu and parts of South India as 21, 2014. well cut-throat competition in the market, this achievement is MEMORANDUM OF UNDERSTANDING commendable. Out of 5.45 lakh MT of total fertilizers sold, Urea alone contributed for 5.00 lakh MT which is the highest sales since The Company entered into MOU with Department of Fertilizers inception (previous best V.Urea sales is 4.99 lakh MT). The market (DOF), Government of India for the year 2014-15 on March 24, share of MFL Urea is 8.34% in South India during 2013-14. 2014 setting up targets for performance of the Company in terms of static and dynamic parameters. Efforts for streamlining logistics operations on cost effective basis continued this year also and 87% of the products were VIGILANCE directly delivered to the dealers. ACTIVITIES AND ACHIEVEMENTS OF VIGILANCE Cash sales through RTGS payment accounted for 98.8% of total DEPARTMENT DURING 2013-14 sales and 99% of the cheques got realised within seven days. . Complaints received were attended and reports submitted There has not been a single case of Bad Debt for this year also. as per Complaints Handling Policy of the Company / Central Agrochemicals, Bio-fertilizers & Organic Manure Vigilance Commission (CVC) guidelines. ` 194.47 lakhs environment friendly neem based Agrochemicals . Continuously monitoring the progress of Disciplinary were traded during the year as against ` 145.93 lakhs during the Proceedings in respect of vigilance cases for timely last year. completion. The Company sold 147 MT of Bio-fertilizers during the year as . Agreed List of suspected Offi cers and List of Offi cers of against 378 MT during last year. Doubtful Integrity were fi nalised and sent to DOF. . CVC guidelines on Tenders and disciplinary proceedings and The Company also sold 8,898 MT of Organic Manure based on other matters as and when received were communicated to Poultry Waste during the year as against 3,827 MT during last Management for necessary action. year in Tamil Nadu & Karnataka. . Vigilance activities for the year 2012-13 were reviewed by the MARKET DEVELOPMENT & AGRO-SERVICE Board of Directors in the 268th Meeting held on July 29, 2013. PROGRAMS . As per the Central Vigilance Commission’s requirement, MFL’s Marketing personnel have contacted 33611 farmers during CVO had two Structured meeting with the CMD, MFL and the year and educated them about the package and practices of pending issues were discussed threadbare and suggestions cultivation of major crops / soil health techniques and optimum given to the Management. usage of chemical fertilizers, bio-fertilizers and neem products. . CVO attended the Review Meeting convened by the As a service to farming community, the Company has collected Secretary, DOF on 27.08.2013 in New Delhi. 5571 Soil samples, analysed and sent the micro & macro nutrient . Tenders with estimated value more than Rs. 2 lacs are being recommendations for various crops to farmers during the year. published in Central Public Procurement Portal (CPPP). PUBLIC DEPOSIT . For all Tenders with value more than Rs. 5 lacs, e-Tendering There are no Public Deposits with the Company. method is being followed. . Annual Property Returns of Offi cers were scrutinized as per ISO 9001 / 14001 CVC guidelines. Renewal certifi cation audit for ISO 9001:2008 (QMS) was . Rotation of Offi cers in sensitive posts effected as per CVC conducted by IRQS during December 2-3, 2013. IRQS have guidelines. renewed the QMS certifi cation for ISO 9001:2008 for MFL for
48th Annual Report 2013 - 14 8 MADRAS FERTILIZERS LIMITED
. For easy reference, CVC Guidelines / Circulars on Tenders was celebrated at Head Offi ce and Regional Offi ces. Various were uploaded in MFL’s Online Integrated System (OLIS). competitions were organized and prizes were distributed. . Vigilance Awareness Week was observed between Oct 28, SC / ST WELFARE ACTIVITIES 2013 and Nov 2, 2013 as advised by CVC. During the week, 13 SC Contract Labourers working with our existing Janitorial Guest Lectures were arranged on the following topics : contract have been appointed as Plant Attendant Trainees. On a) “Vigilance Aspects” by Shri D P Naidu, I.R.S, CVO, CPCL on completion of 2 years of training, they will be absorbed in Grade Oct 28, 2013. I position. During the fi rst year of training period, they will be paid b) “Promoting Good Governance – positive contribution of with a consolidated amount of `15,000/- p.m and second year of Vigilance” by Shri M Dandayudhapani, I.O.F.S, Director in training period, they will be paid with a consolidated amount of Armoured Vehicles Head Quarters, Avadi (Ex-CVO, Chennai `16,500/- p.m. Port Trust) on Oct 29, 2013. GM - P&A’s position falls under SC point under direct recruitment. c) “Disciplinary Proceedings” by Shri N Murali Krishna, I.T.S., Per recruitment Policy, GM - P&A was appointed and confi rmed CVO, MFL, on Oct 30, 2013. in E8 Scale of Pay. d) “Vigilance Awareness / Participative Vigilance” by Dr C Recasting of roster effective July 02, 1997 was completed during L Ramakrishnan, I.P.S (Retd.), former DGP of DVAC, April 2013. 27 SC employees benefi ted due to recasting of roster, Government of Tamilnadu on Oct 31, 2013. by way of promotion / pre-ponement of promotions. Besides the above programmes, Essay Competition on CORPORATE SOCIAL RESPONSIBILITY “Role of Youth in Transforming India into a Corruption MFL ensures regular supply of potable water through pipelines Free Country” was held for the students of St Thomas for around 500 families from MFL Plant to Harikrishnapuram Matriculation Higher Secondary School, Manali, Chennai (Manali), a neighbourhood village. – 600 068. Essay / Slogan Competitions were held for the employees of MFL. Prizes were distributed to the winners of A contribution of ` 50 lac was made to Gramin Vikas Trust, the above competitions on Nov 6, 2013 by CMD, MFL. Hand Odisha towards Relief and Rehabilitation activities in the fl ood out detailing the Do’s and Don’ts in Tendering was brought affected area at Odisha. out during the occasion ` 25,000/- was contributed to Prime Minister’s Relief fund for . Two Vigilance Offi cials attended a week long Training Relief and Rehabilitation activities in the fl ood affected area of Program at CBI-Academy, Ghaziabad during November Uttrakhand. 2013. A sum of ` 30,000/- was spent for Celebration of Dr. Ambedkar Jayanthi, by MFL SC / ST Employees Welfare Association, MFL, HUMAN RELATIONS AND INDUSTRIAL RELATIONS Manali, Tamil Nadu. MANPOWER & TRAINING INVESTOR RELATIONS CELL (IRC) The total strength of MFL as on 31.03.2014 is 734 as against 773 as on 31.03.2013. 900 Nos. of Training Programs have been IRC is functioning in the Company under the Chief Financial conducted on behavioural & technical subjects to derive enduring Offi cer (General Manager-F&A) with members from various benefi t, during the period from April 2013 to March 2014. Groups to create awareness of the Company’s strength and ensuring timely communication to shareholders. INDUSTRIAL RELATIONS DIRECTORS During the year, the overall Industrial Relation situation in the Company has been normal and cordial. Government of India have appointed the following GOI Nominee Directors in MFL Board :- OFFICIAL LANGUAGE IMPLEMENTATION a) Shri K M Gupta, IES, Economic Advisor, Department of MFL has been continuously exceeding the target fi xed by Fertilizers in place of Shri V K Subburaj, IAS, effective May Department of Offi cial Language for letter correspondence 01, 2014; and in Hindi and other implementation programs. Hindi Fortnight
48th Annual Report 2013 - 14 9 MADRAS FERTILIZERS LIMITED
b) Shri Rajiv Yadav, IAS, Additional Secretary and Financial Management Discussion and Analysis Report, as required under Advisor, Department of Fertilizers, in place of Shri Satish Listing Agreement is enclosed as Annexure-III forming part of Chandra, IAS, effective July 03, 2014. this report. The Board placed on record the valuable and outstanding Certifi cate received from the Auditors of the Company regarding contribution made by the outgoing Directors Shri V K Subburaj, compliance of Corporate Governance guidelines of SEBI as IAS and Shri Satish Chandra, IAS during their tenure as Directors required under Listing Agreement is enclosed as Annexure IV on the Board for the substantial and sustainable development of forming part of the report. the Company. Declaration affi rming compliance with the code of conduct AUDITORS pursuant to clause 49 of the Listing Agreement is enclosed as Annexure V forming part of this report. The Comptroller & Auditor General of India have appointed M/s B Thiagarajan & Co, Chartered Accountants, Chennai APPRECIATION as Statutory Auditors of the Company for the year Your Directors wholeheartedly place on record their appreciation 2013-14. for the continued and unstinted support of Government of India, STATUTORY INFORMATION Department of Fertilizers, Government of Tamilnadu, NICO, Financial Institutions, Banks, Depositors and all stakeholders No employee was in receipt of remuneration for any part of the during the year. It is most appropriate to mention that the year at a rate which is more than 5 lacs per month as provided ` Directors convey their gratitude to the Department of Fertilizers under Section 134 of Companies Act 2013. for settlement of subsidy bills on priority basis and to the dealers The data on Conservation of Energy, Technology Absorption and and farmers for their sustained support to Vijay products. Last Foreign Exchange Earnings and Outgo in accordance with the but not the least that your Directors also place on record their provisions of Section 134 of Companies Act 2013 are given in the appreciation for the dedication, commitment and sincere services Annexure-I forming part of this report. rendered by the employees for sustained improvements. Directors’ Responsibility Statement as required under Section By order of the Board 134 of Companies Act 2013 is furnished in Annexure-II forming Chennai Dr I Vijayakumar part of this report. July 30, 2014 Chairman & Managing Director
48th Annual Report 2013 - 14 10 MADRAS FERTILIZERS LIMITED
ANNEXURE - 1 THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF DIRECTORS) RULES 1988 FORM A Disclosure of Particulars with respect to Conservation of Energy. Financial Year Previous Year 2013-14 2012-13 A. Power and fuel consumption 1. Electricity (a) Purchased Unit (lakhs) * 1200.194 1007.896 Total amount (` in lakhs) 7879.743 6838.738 Rate / unit (`) 6.57 6.79 * Includes power consumed at TTP, Kodungaiyur (b) Own generation (i) Through diesel generator Units (lakhs) 17.358 31.607 Diesel Consumption (KL) 503.590 946.060 Units per ltr. of diesel oil 3.447 3.161 Cost/unit (`) 18.88 14.74
2. Coal Not applicable Not applicable
3. Furnace oil & LSHS Quantity (tonnes) 1102423 108783 Total cost (` in lakhs) 56162.887 53338.708 Average rate (` per tonne) 50945.09 49032.21
4. Others/generation: Nil Nil
B. Consumption per unit of production FICC Norm 2013-14 2012-13 (a) Product : Ammonia Electricity (KWH) * 115.000 120.439 103.655 Fuel oil + LSHS (MT) 0.2341 0.2029 0.2340 Naphtha (MT) 0.7829 0.7371 0.7896 * includes own generation
(b) Product: Urea Electricity (KWH) 202.000 170.631 154.215 Fuel oil + LSHS (MT) 0.1309 0.1062 0.1066
(c) Product: NPK Electricity (KWH) 43.410 56.358 65.452 Fuel oil + LSHS (MT) 0.0069 0.0121 0.0094
48th Annual Report 2013 - 14 11 MADRAS FERTILIZERS LIMITED
FORM - B DISCLOSURE OF PARTICULARS WITH RESPECT TO RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION RESEARCH & DEVELOPMENT 1 Specifi c areas in which R&D carried out by the Company 2 Benefi ts derived as a result of the above R&D 3 Future plan of action
4 Expenditure on R&D NIL A. Capital B. Recurring (in lacs) C. Total (in lacs) D. Total R&D expenditure as a percentage of total turnover
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
1 Efforts in brief made towards technology absorption, adaptation and innovation.
2 Benefi ts derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution, etc. NIL
3 Details of imported technology (imported during the last 5 yrs reckoned from the beginning of the fi nancial year)
FOREIGN EXCHANGE EARNINGS AND OUTGO 2013-14 1. Activities relating to export NIL 2. Total Foreign Exchange used (` Cr) a) Raw Materials 75.89 b) Components & Spare Parts 13.82 c) Books & Periodicals / Travel 0.05 Total 89.76 3. Total Foreign Exchange earned NIL
48th Annual Report 2013 - 14 12 MADRAS FERTILIZERS LIMITED
ANNEXURE - II
DIRECTORS’ RESPONSIBILITY STATEMENT
As required by Section 217 (2AA) of the Companies Act, 1956 (Section 134 of Companies Act, 2013) with respect to the Directors’ Responsibility Statement it is here by confi rmed that: • in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures there-from; • the Board had selected such accounting policies, consulted the Statutory Auditors and have applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the profi t and loss of the company for that year; • the Board had taken proper and suffi cient care, to the best of their knowledge and ability, for the maintenance of adequate accounting records, in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; • the Board had prepared the annual accounts on a going concern basis. • the Board had laid down internal fi nancial control to be followed by the Company and that such internal fi nancial controls are adequate and were operating effectively. • the Board had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
48th Annual Report 2013 - 14 13 MADRAS FERTILIZERS LIMITED
ANNEXURE - III MANAGEMENT DISCUSSIONS AND ANALYSIS Business Madras Fertilizers Limited (MFL) incorporated in the year 1966 is a PSU under the administrative control of the Department of Fertilizers (DOF), Ministry of Chemicals & Fertilizers, Government of India. MFL is engaged in the manufacture of Ammonia, Urea and Complex Fertilizers (N:P & N:P:K) at Manali, Chennai. MFL is also engaged in manufacturing and Marketing Bio-fertilizers and eco-friendly Agro Chemicals under the brand name “ VIJAY “. Introduction During the year 2013-14, normal rainfall was received in Andhra Pradesh, Karnataka and Kerala States. However, in Tamilnadu only 80% of normal rainfall was received. The crop coverage during the year was normal in all the Southern States of Company’s marketing territory except Tamilnadu wherein 90% of cropped area covered . The consumption of DAP also have come down when compared to last year due to high cost of phosphatic fertilizers because of soaring price of raw materials in the International Market. Fertilizer Sector The consumption of DAP and MOP have come down because of huge escalation cost compared to last year and consumption of Urea and NP fertilizers (20:20:0 / 16:20:0) have marginally increased due to release of water from the reservoirs on due date in delta areas of Andhra Pradesh, Karnataka and Kerala and food grains productivity has been satisfactory during the year compared to corresponding period of last year. Since Urea is sold under Government Administered price, the Urea manufacturers especially those who are using Naphtha as feedstock for Ammonia / Urea production facing liquidity problems due to the high cost of crude oil in the International market and the Government also maintaining the increased level of subsidy which is not conforming to the escalation cost of petroleum products / transport subsidy and Government has given a forward planning direction to convert naphtha into Natural Gas as feedstock at the earliest to reduce the subsidy burden and to maximise the profi t. For Complex fertilizers, NBS is applicable from 01.04.2010 where subsidy is fi xed by Government on yearly basis and the MRP is allowed to be fi xed by manufacturers based on market dynamics. In the current year, for 17-17-17 from 1.4.2014 onwards Government is extending an amount of ` 9,359/MT as subsidy. The subsidy element is being regulated by the Department of Fertilizers through Mobile Fertilizer Monitoring System (mFMS). From Nov 2012 onwards, the system is implemented and 100% acknowledgement from dealers are received upto March 31, 2014. Global Scenario During the current year (2014-15), the prices of Urea and MOP have come down to USD 300 PMT from USD 350 PMT (2013-14) and USD 322 PMT from 375 PMT (2013-14) respectively in the International Market and Phosphoric Acid and Ammonia prices have gone up to USD 680 PMT from USD 609 PMT and USD 545 PMT from USD 500 PMT respectively. This has resulted in the price increase of NP / NPK products at international level and also huge impact in producing our indigenous complex / DAP in India.
48th Annual Report 2013 - 14 14 MADRAS FERTILIZERS LIMITED
PRODUCTION, IMPORTS AND CONSUMPTION OF MAJOR FERTILIZERS The fi gures of production, imports and consumption of major fertilizers viz, Urea and NPK complexes in India for the years 2012-13 and 2013-14 are given below: (Lakh MT) UREA DAP NPK MOP PRODUCT 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 PRODUCTION 225.77 227.17 36.47 36.12 61.84 69.14 NIL NIL IMPORTS 80.45 70.87 57.00 32.61 4.04 3.62 24.40 31.77 CONSUMPTION 301.58 304.54 91.27 68.54 72.74 71.27 21.30 21.92 STOCK 5.50 2.21 3.84 3.12 2.37 4.42 0.72 1.40 MFL PRODUCTION OF UREA / NP / NPK FERTILIZERS (Lakh MT) YEAR 2009-10 2010-11 2011-12 2012-13 2013-14 UREA PRODUCTION 4.36 4.79 4.87 4.36 4.87 NP/NPK PRODUCTION - - 0.36 1.00 0.45 PRODUCTION OF VIJAY BIO FERTILIZERS (MT) YEAR 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 QUANTITY 461.69 436.87 452.64 480.65 377.51 142.77
ALL INDIA DEMAND FORECAST FOR FERTILIZER NUTRIENTS 2014-15 TO 2016-17 (Lakh MT) PERIOD N P K Total Ratio (NPK) 2014-15 193 92 52 337 3.71:1.77:1 2015-16 199 96 55 351 3.62:1.75:1 2016-17 206 100 58 364 3.55:1.72:1
ALL INDIA PRODUCT-WISE DEMAND FORECAST FOR 2014-15 TO 2015-16 (Lakh MT) PERIOD UREA DAP SSP MOP COMPLEX FERTILIZERS 2014-15 338 126 41 61 109 2015-16 348 131 43 64 114 The projections of demand for fertilizer products are based on existing product nutrient ratio. However, with introduction of Nutrient Based subsidy scheme and programs like soil health management and to promote use of fertilizers nutrient, the demand for complex fertilizers get rationalized in the coming years. PRICING POLICY FOR UREA A New Pricing Scheme (NPS) for Urea units took effect in the place of Retention Pricing Scheme from 1.4.2003 and implemented in Stages. Stage I, II &III were implemented from 1.4.2003 to 31.3.2004, 1.4.2004 to 30.9.2006 & 1.10.2006 respectively. Amendment to NPS-III was made effective from April 1, 2009 to restrict the reduction in fi xed cost to 10%. The tenure of NPS-III policy which was up to March 31, 2011 has been extended till March 2014. The Modifi ed NPS-III approved by GOI will be implemented for a period one year effective April 2014.
48th Annual Report 2013 - 14 15 MADRAS FERTILIZERS LIMITED
Under Modifi ed NPS-III Policy, additional fi xed cost (towards increase in the four components, viz, salaries and wages, contract labour, selling expenses and repair & maintenance) of ` 350/MT or actual increase in the above four components of fi xed cost during the year 2012-13 compared to the year 2002-03, whichever is lower will be paid to existing urea units. In addition, the special compensation of ` 150/MT will be paid to urea plants which have completed 30 years and converted to Gas. The production of the high cost naphtha based urea units will continue under modifi ed NPS-III till the gas availability and connectivity is provided to these units or June 2014 whichever is earlier, beyond which subsidy for naphtha based plants will not be paid. Though, the Company has taken all out efforts to convert the feedstock to gas, has sought permission from DOF to operate the Plants with existing feedstock till the availability and connectivity to gas is made to MFL as recommended by the Department Related Parliamentary Committee. NUTRIENT BASED SUBSIDY (NBS) POLICY FOR PHOSPHATIC & POTASSIC FERTILIZERS The Government of India introduced the Nutrient Based Subsidy Phase I with effect from 1.4.2010. This scheme is applicable for DAP, MOP, MAP, SSP, TSP and for other twelve grades of Complex Fertilizers. Under NBS, subsidy is fi xed for the year without any escalation/de-escalation and market price is open. The manufacturers are having freedom to fi x the market price based on input prices and they are required to print Maximum Retail Price (MRP) along with applicable NBS per bag on each fertilizer bag. The per kg Nutrient Based Subsidy for nutrients ‘N’ ‘P’ ‘K’ & ‘S’ for 2013-14 & 2014-15 is given below: (`) Sl.No. Nutrients 2013-14 2014-15 1 N 20.875 20.875 2 P 18.679 18.679 3 K 18.833 15.500 4 S 1.677 1.677 Accordingly, NBS was fi nalized for different P&K fertilizers and additional subsidy was given for fortifi ed fertilizers with secondary & micro-nutrients like Boron & Zinc. RISK MANAGEMENT Major challenges that fertilizer industry facing are increasingly volatile International market for fertilizers and raw materials, steep depreciation in rupee value, increasing prices of NPK fertilizers due to new NBS policy and rise in the working capital requirements of fertilizer fi rms in addition to the historical challenges associated with the rural markets. The Company has a well laid down Risk Management System with Risk Assessment & Risk Mitigation procedures to evolve suitable strategies for mitigating associated risks through better management practices and achieve corporate objectives. The identifi ed potential risks such as Operational, Input, Utilities, Project Implementation, Business, Competition, Assets, Internal Control, Environmental, Financial, Human Resources, Legal, Regulatory, MIS and Market Risks and their impact on the Company’s performance and Stakeholders’ interest is assessed on continual manner. The reporting of Risk Assessment and Risk Mitigations under the policy is reviewed by the Audit Committee and the Board periodically. INTERNAL CONTROL SYSTEM The Company has an Internal Control System designed to ensure security of the assets of the Company and effi ciency of operations. The Internal Control System includes proper delegation of authority, supervision, Online Integration System (OLIS) and checks and procedures through documented policy guidelines and manuals. The Company has an Internal Audit function, managed by a team of professionals, which is empowered to examine the adequacy and compliance with the policies, procedures and statutory requirements. Internal Audit conducts regular audit across Company’s operations and the management duly considers and takes appropriate action on the recommendations made by the Government Auditors, Statutory Auditors, Internal Auditors and the Audit Committee of the Board of Directors for the improvement of the same.
48th Annual Report 2013 - 14 16 MADRAS FERTILIZERS LIMITED
ANNEXURE - IV Auditors Report on Corporate Governance To The Members of Madras Fertilizers Limited, Manali, Chennai 600068
We have examined the compliance of conditions of Corporate Governance by Madras Fertilizers Limited for the year ended 31st March 2014, as stipulated in Clause 49 of the Listing Agreement of the said company with Stock Exchanges. The compliance of conditions of Corporate Governance is the responsibility of Company’s management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the fi nancial statements of the Company. In term of listing agreement, the composition of Board of Directors (Clause 49-I(A)) and Audit committee (Clause 49-II(A)) is to be reconstituted with Qualifi ed and Independent Members. Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us and representations made by management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the abovementioned Listing Agreement. As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we have to state that as per the records maintained and certifi ed by the Registrar and Share Transfer Agents of the Company, there were no investor grievances are pending for a period exceeding one month against the Company as per the records maintained by the Investors’ Grievances Committee. We further state that such compliance is neither an assurance as to the future viability of the Company nor the effi ciency or effectiveness with which the management has conducted the affairs of the Company.
For B THIAGARAJAN & CO. Chartered Accountants Firm Regn. No. 004371S
Ram Srinivasan Chennai Partner May 26, 2014 M No. 220112
ANNEXURE -V DECLARATION AFFIRMING COMPLIANCE WITH THE CODE OF CONDUCT PURSUANT TO CLAUSE 49 OF THE LISTING AGREEMENT The Board had laid down a code of conduct for all Board Members and Senior Management of the Company. The code of conduct is posted on the website of the Company. All Board Members and Senior Management personnel affi rmed compliance with the code for the fi nancial year 2013-14. Chennai Dr I Vijayakumar July 30, 2014 Chairman & Managing Director
48th Annual Report 2013 - 14 17 MADRAS FERTILIZERS LIMITED
REPORT ON CORPORATE GOVERNANCE (Pursuant to Clause 49 of the Listing Agreement) Company’s Philosophy The Company adopts well-established corporate governance principles and practices developed over a period of time, which are constantly updated in the changing scenario. The Company’s citizen charter provides for transparency, integrity and accountability in all spheres of corporate functions. The Company’s Corporate Governance principle and practice include internal empowerment of middle level Offi cers. Board of Directors Composition At present the strength of the Board comprises eight members with varied and rich experience. Chairman and Managing Director and Director – Technical are Executive Directors and all other Directors are Non-Executive Directors. The Board of Directors comprise of Two GOI Nominee Directors and Two functional Directors viz. Director – Technical and CMD appointed by the Government of India, three Directors appointed by the Naftiran Intertrade Co. Ltd., Co-Promoter and one BIFR Nominee Director. The Company is a Government of India Undertaking under the control of Ministry of Chemicals and Fertilizers, Dept of Fertilizers (DOF), Government of India. For appointment of independent directors, the Company has taken up the matter with DOF, the Administrative Ministry. It is understood that a search committee has been engaged to identify and appoint suitable persons as Independent Directors. DOF’s communication on appointment of independent directors is awaited. Other Details relating to the Board Details regarding tenure, number of other Directorships/Committee Memberships (viz. Audit Committee and Shareholders Grievance Committee as per SEBI’s Corporate Governance Code) held by Directors during the year are tabulated below:
S. Director Category Tenure In other Boards / Committees No. From To Directorship Membership Chairmanship 1 Dr I Vijayakumar, IRS CMD 11.05.2012 Continuing 2 - - 2 Shri V K Subburaj, IAS NED-Govt. Nominee 02.05.2013 30.04.2014 1 - - 3 Shri Rajiv Yadav, IAS NED-Govt. Nominee 03.07.2014 Continuing 3 - 3 4 Shri Satish Chandra, IAS NED-Govt. Nominee 08.08.2012 02.07.2014 3 - - 5 Shri K M Gupta, IES NED-Govt. Nominee 01.05.2014 Continuing 1 - - 6 Shri M Sagar Mathews ED 24.08.2009 31.10.2013 - - - Director - Technical 7 Shri CMT Britto ED-Addl. Charge 08.11.2013 Continuing 1 2 - Director – Technical (Addl.Charge) 8 Shri M H Ghodsi NED-NICO Nominee 25.04.2009 Continuing 1 - - 9 Shri Ahmad Azmoodeh NED-NICO Nominee 22.08.2012 Continuing 1 1 - 10 Shri Mohammad Ali Ahmadi NED-NICO Nominee 22.05.2013 Continuing 1 - - 11 CA Mukesh Mohan Gupta BIFR Nominee Director 04.06.2013 Continuing 6 2 - ED - Executive Director, NED - Non Executive Director GOI appointed Shri CMT Britto, Director (Technical), RCF as Director (Technical) on additional charge in MFL effective 8.11.2013.
48th Annual Report 2013 - 14 18 MADRAS FERTILIZERS LIMITED
Meetings Held During the year, 8 meetings of Board were held on 26th April 2013, 2nd May 2013, 24th May 2013, 29th July 2013, 22nd August 2013, 25th September 2013, 5th November 2013 and 13th February 2014. The Annual General Meeting was held on 25th September 2013. Details of attendance at the Board Meetings and Annual General Meeting are as follows:-
Board Meetings during respective Attendance at Director DIN Category tenure of Directors last AGM Held Attended Dr I Vijayakumar 05307931 CMD 8 7 Present Shri V K Subburaj 02402775 Non-Executive Director 7 7 No Shri Satish Chandra 01970013 Non-Executive Director 8 7 No Shri M Sagar Mathews 02820429 Executive Director 6 6 Present Shri CM T Britto 02449069 Executive Director (Addl.Charge) 1 1 NA Shri M H Ghodsi 02554462 Non-Executive Director 8 4 Present Shri Ahmad Azmoodeh 06400250 Non-Executive Director 8 5 Present Shri Mohammad Ali Ahmadi 06629513 Non-Executive Director 8 - No CA Mukesh Mohan Gupta 00794729 BIFR Nominee Director 5 2 No
Management Committee Management Committee comprises Shri Rajiv Yadhav, Shri K M Gupta and Shri Ahmad Azmoodeh. This Committee meets to consider any urgent matter and to review the Company’s operations. Audit Committee During the year 2013-14, the Audit Committee met on 4 times i.e. 24th May 2013, 29th July 2013, 5th November 2013, 13th February 2014. Details of attendance of the Audit Committee Meetings are as follows:-
Name of the Audit Committee Members Status No of Meetings Attended
Shri V K Subburaj Chairman 4 Shri Satish Chandra Member 4 Shri M H Ghodsi Member 4 Shri Mohammad Ali Ahmadi Member 3 CA Mukesh Mohan Gupta Member 1
Remuneration Committee Being a Central Public Sector Undertaking, the Managerial Remunerations for the executives are fi xed by the Government of India. Hence, the constitution of remuneration committee does not arise.
48th Annual Report 2013 - 14 19 MADRAS FERTILIZERS LIMITED
Details of Remuneration to the Directors Payment of remuneration to the Chairman and Managing Director is as per the terms and conditions of appointment by the Government of India and approved by the Board. The aggregate value of the salary, incentives, perquisites and other benefi ts paid by the Company to the CMD and the Director (Technical) is ` 43,75,962/-. No remuneration is paid to non-executive directors for attending the Board / Committee Meetings during the year. Shareholders’ / Investors’ Grievance Committee During the year 2013-14, two meetings of Investors’ Grievance Committee were held on May 24, 2013 and November 05, 2013. The Committee comprises Dr I Vijayakumar, CMD, Shri M Sagar Mathews and Shri Ahmad Azmoodeh and CA Mukesh Mohan Gupta as members. The scope and function of the Committee is per provisions of the Listing Agreement.
No of Meetings Name of the Director Status attended Dr I Vijayakumar Chairman 2 Shri M Sagar Mathews Member 1 Shri Ahmad Azmoodeh Member 2 CA Mukesh Mohan Gupta Member - The Board has delegated power for approval of the share transfer and other related matters to the Share Transfer Committee comprising of Shri D Sundarasekaran and Shri V Muralidharan, General Manager (F&A) and Company Secretary. During the year, 11 Share Transfer Committee Meetings have been held to consider share transfer and other share related matters. Total number of complaints redressed by the Company and Share Transfer Agents during the period was 15 which includes attending Loss of Share Certifi cate, general queries etc. All the complaints were redressed in full and there is no pending as of March 31, 2014. Compliance Offi cer: Mr V Muralidharan, appointed as Company Secretary and Compliance Offi cer effective December 27, 2013. General Body Meetings The venue and the starting time of the last 3 Annual General Meetings were :
Year Venue Date Time 2012-2013 MFL Training Centre Auditorium 25/09/2013 3.00 P.M. (North Gate Entrance) (Wednesday) MFL Plant, Manali, Chennai – 600 068 2011-2012 MFL Training Centre Auditorium 12/09/2012 3.00 P.M. (North Gate Entrance) (Wednesday) MFL Plant, Manali, Chennai – 600 068 2010-2011 MFL Training Centre Auditorium 13/09/2011 2.30 P.M. (North Gate Entrance) (Tuesday) MFL Plant, Manali, Chennai – 600 068 During the year under review, no special resolution was passed by postal ballot as per Companies Act, 1956 and Listing Agreement.
48th Annual Report 2013 - 14 20 MADRAS FERTILIZERS LIMITED
Disclosures There were no signifi cant related party transactions or transactions of material nature with the promoters, directors, management or relatives which may have potential confl ict with the interests of the Company. There were no instances of non-compliance by the Company on matters related to the capital market during the last three years and there were no penalties, strictures imposed by Stock Exchanges or SEBI or any statutory authority. Means of Communication Whether half-yearly report sent to each household of shareholders: No. Quarterly Financial Results : Quarterly Financial results are published in one National Daily, Financial Express and one Regional Daily Maalaisudar. The fi nancial results are made available on the Company’s website: www.madrasfert.nic.in. Whether any presentation made to institutional investors or to the analyst: No. General Shareholders Information Annual General Meeting, Date, Time and Venue: AGM Date : September 29, 2014 Time : 02.30 P.M Venue : MFL Training Centre Auditorium (North Gate Entrance) MFL Plant, Manali, Chennai – 600 068 Financial Year : April 2013 – March 2014 Book Closure Date : 23-09-2014 to 29-09-2014 Dividend Payment : Nil Whether Management Discussion and Analysis is part of this report: Yes
48th Annual Report 2013 - 14 21 MADRAS FERTILIZERS LIMITED
Listing on Stock Exchanges: National Stock Exchange of India Ltd The Company has paid the listing fees to the stock exchange in time. Stock Code / Symbol : National Stock Exchange of India Ltd : MADRASFERT High / Low share prices during the year April 1, 2013 to March 31, 2014 National Stock Exchange of India Ltd NSE High NSE Low S & P CNX Nifty S & P CNX Nifty Value Month Quantity (`) (`) Index High Index Low (` lacs Apr 2013 13.50 11.15 5962.30 5477.20 877071 109.35 May 12.65 9.50 6229.45 5910.15 1622110 170.02 Jun 11.20 9.75 6011.00 5566.25 624022 64.48 Jul 13.80 9.85 6093.35 5675.75 847423 95.67 Aug 13.50 9.20 5808.50 5118.85 852676 100.20 Sep 14.40 11.80 6142.50 5318.90 716142 95.68 Oct 14.40 12.40 6309.05 5700.95 496645 66.75 Nov 15.00 12.20 6342.95 5972.45 612929 83.42 Dec 14.75 12.80 6415.25 6129.95 563683 77.55 Jan 2014 14.25 12.15 6358.30 6027.25 410007 54.50 Feb 14.90 12.15 6282.70 5933.30 391670 53.45 Mar 15.9 13.40 6730.05 6212.25 571227 84.60 Share Transfer System M/s Integrated Enterprises (India) Ltd (IEL), a SEBI Registered Registrar & Share Transfer Agent has been assigned the Share Transfer and Depository Registry related functions. Share Transfer Committee attends to share transfer formalities every fortnight. Share Transfer Agent & Depository Registry: M/s Integrated Enterprises (India) Ltd Kences Towers, 2nd Floor 1, Ramakrishna Street Off: North Usman Road T Nagar, Chennai 600 017 Phone 091-044 - 2814 0801 to 803 Email : [email protected] Dematerialisation of Shares: MFL has connectivity with both NSDL and CDSL ISIN No : INE 414A01015 156728251 equity shares (representing 97.28% of total shares) have been dematerialized as of March 31, 2014. In terms of number of shareholders, 61.30% of shareholders have dematted their shares.
48th Annual Report 2013 - 14 22 MADRAS FERTILIZERS LIMITED
Distribution of Shareholding: The distribution of shareholding as on March 31, 2014 is as follows:
PHYSICAL NSDL CDSL TOTAL Dist Count SHARES % Count SHARES % Count SHARES % Count SHARES % Up to 500 6712 1892149 1.17 7118 1497316 0.93 2793 522379 0.32 16623 3911844 2.43 501 - 1000 1837 1793300 1.11 1664 1547366 0.96 481 439306 0.27 3982 3779972 2.35 1001 - 2000 210 380500 0.24 610 1011153 0.63 198 327405 0.20 1018 1719058 1.07 2001 - 3000 38 107500 0.07 194 519860 0.32 101 269683 0.17 333 897043 0.56 3001 - 4000 5 17100 0.01 75 279170 0.17 31 113589 0.07 111 409859 0.25 4001 - 5000 17 84900 0.05 103 499419 0.31 54 261100 0.16 174 845419 0.52 5001 - 10000 11 97600 0.07 153 1204433 0.75 53 421760 0.26 217 1723793 1.07 Above 10000 0.00 152 145377574 90.24 49 2436738 1.51 201 147814312 91.75 Grand Total 8830 4373049 2.72 10069 151936291 94.31 3760 4791960 2.97 22659 161101300 100.00
CATEGORY OF SHAREHOLDERS AS ON MARCH 31, 2014 AS FOLLOWS:
PHYSICAL ELECTRONIC TOTAL
SNo. CATEGORY No of % of % of No of % of % of No of % of % of Shares Shares Shares Holders Holders Shares Holders Holders Shares Holders Holders Shares
1 BANK'S 13 0.06 34600 0.02 2 0.01 245050 0.15 15 0.07 279650 0.17
2 BODIES CORPORATE 80 0.35 144001 0.09 279 1.23 2048531 1.27 359 1.58 2192532 1.36
3 CLEARING MEMBER 0 0.00 0 0.00 54 0.24 56858 0.04 54 0.24 56858 0.04
4 GOVERNMENT/PROMOTERS 0 0.00 0 0.00 1 0.00 95851700 59.50 1 0.00 95851700 59.50
5 EMPLOYEES 88 0.39 74600 0.05 122 0.54 96843 0.06 210 0.93 171443 0.11
6 MUTUAL FUND 1 0.00 2400 0.00 0 0.00 0 0.00 1 0.00 2400 0.00
7 N R I 0 0.00 0 0.00 67 0.30 332196 0.21 67 0.30 332196 0.21
8 FOREIGN PROMOTERS 0 0.00 0 0.00 1 0.00 41516500 25.77 1 0.00 41516500 25.77
9 RESIDENT INDIAN 8648 38.17 4117448 2.56 13302 58.71 16570573 10.27 21950 96.88 20688021 12.83
10 TRUST 0 0.00 0 0.00 1 0.00 10000 0.01 1 0.00 10000 0.01
TOTAL 8830 38.97 4373049 2.72 13829 61.03 156728251 97.28 22659 100.00 161101300 100.00
48th Annual Report 2013 - 14 23 MADRAS FERTILIZERS LIMITED
MODEWISE SHAREHOLDINGS AS ON 31-03-2014 MODE COUNT SHARES % PHYSICAL 8830 4373049 2.72 NSDL 10069 151936291 94.31 CDSL 3760 4791960 2.97 GRAND TOTAL 22659 161101300 100.00
CATEGORY COUNT SHARES % G O I 1 95851700 59.50 NAFTIRAN INTER TRADE COMPANY LTD 1 41516500 25.77 OTHERS 22658 23733100 14.73 GRAND TOTAL 22659 161101300 100.00
Plant Location : Manali, Chennai 600 068 The Address for correspondence is V. Muralidharan General Manager (Finance & Accounts) and Company Secretary Madras Fertilizers Limited Manali, Chennai 600 068 Tel : 44 – 2594 5203 Dir : 44 – 2594 2281 Fax : 2594 3613 Email : [email protected] / [email protected]
48th Annual Report 2013 - 14 24 MADRAS FERTILIZERS LIMITED
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619 (4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS OF MADRAS FERTILIZERS LIMITED, CHENNAI FOR THE YEAR ENDED MARCH 31, 2014
The preparation of the fi nancial statements of Madras Fertilizers Limited, Chennai for the year ended March 31, 2014 in accordance with the fi nancial reporting frame work prescribed under the Companies Act, 1956 is the responsibility of the management of the Company. The Statutory Auditor appointed by the Comptroller and Auditor General of India under section 619 (2) of the Companies Act, 1956 is responsible for expressing opinion on these fi nancial statements under section 227 of the Companies Act, 1956 based on independent audit in accordance with the Standards on Auditing prescribed by their professional body, the Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit Report dated 26.05.2014 I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under Section 619 (3) (b) of the Companies Act, 1956 of the fi nancial statements of Madras Fertilizers Limited, for the year ended March 31, 2014. This supplementary audit has been carried out independently without access to the working papers of the Statutory Auditor and is limited primarily to inquiries of the Statutory Auditor and Company personnel and a selective examination of some of the accounting records. On the basis of my audit, nothing signifi cant has come to my knowledge which would give rise to any comment upon or supplement to the Statutory Auditor’s Report under Section 619 (4) of the Companies Act, 1956.
For and on the behalf of the Comptroller & Auditor General of India
(G. SUDHARMINI) PRINCIPAL DIRECTOR OF COMMERCIAL AUDIT AND EX-OFFICIO MEMBER AUDIT BOARD, CHENNAI Place : Chennai Date : 27.08.2014
48th Annual Report 2013 - 14 25 MADRAS FERTILIZERS LIMITED
COMMENTS OF THE STATUTORY AUDITORS THE COMPANY’S REPLIES UNDER SECTION 217 (3) OF M/s B THIAGARAJAN & CO, CHARTERED ACCOUNTANTS, THE COMPANIES ACT, 1956 CHENNAI ON THE ACCOUNTS OF MADRAS FERTILIZERS LIMITED FOR THE YEAR 2013-14 7 Reference is invited to Note 24(B)(iii) regarding accounting of The additional compensation was originally approved by DOF a sum of Rs 20.80 crores towards additional compensation for three Companies using Naphtha based Ammonia, in the under Nutrient Based Subsidy (NBS) for producing P&K production of NPK complex fertilizers up to March 31, 2012 fertilizers which has been accrued as receivable from to support them to sustain production of NPK and to convert Department of Fertilizers (DOF) during the current fi nancial to Natural Gas feedstock by that time. None of them could year ended 31st March 2014. As the proposal to extend convert to Natural Gas as the same was not available. the scheme for additional compensation is still under For one of the Companies which signed Gas Transportation consideration by DOF as at the year end, in our opinion, the Agreement, additional compensation was extended up to sum of Rs 68.20 crores (including Rs. 47.40 crores pertaining June 2013. Applying the same principle, the Company has to previous year ended 31st March 2013) is not recoverable realistically accounted the additional compensation at the and to that extent has the effect of overstatement of profi t 2011-12 announced rates for 2012-13 and based on the for the year ended 31st March 2014 and claims recoverable letter from DOF dated 24.04.2014 stating that the proposal (forming part of Note 16 - Other Current Assets) as at 31st to extend the additional compensation up to March 2014 is March 2014. under the active consideration, the Company has realistically Paragraph 7 has the effect of overstatement of the current accounted the same as receivable for 2013-14 also. year’s profi t to the extent of Rs 20.80 crores, and has the In the considered opinion of the Company, had the same not effect of overstatement of net worth and overstatement of been accounted, the Accounts shall not give a true and fair claims recoverable (forming part of Note 16 - Other Current view and shall defeat the very purpose of matching concept Assets) to the extent of Rs. 68.20 crores. in as much as the expenditure is accounted, the estimated income also has to be accounted. This is adequately disclosed under the Signifi cant Accounting Policies - Note 24 (A) 10 (ii). 8 Reference is invited to Note No. 24(A)(7)(vii) of the Signifi cant Ammonia is only an intermediary and not a fi nished product Accounting Policies of the Company regarding valuation for the Company as it is meant for captive consumption only. of inventories, Ammonia is valued at cost which is not As per the Government guideline, Urea manufacturers are in accordance with Accounting Standard 2 (Valuation of not allowed to sell Ammonia unless declared as surplus and Inventories) which requires inventory to be valued at lower of with prior permission of GOI. cost and Net Realisable Value (NRV) Per Para 24 of AS – 2 (Valuation of Inventories) materials and other supplies held for use in the production are not written down below cost if the fi nished products in which they will be incorporated are expected to be sold at or above cost. Hence, the valuation adopted by the Company is in line with AS-2 (Valuation of Inventories). Being industry practice, valuation of Ammonia at cost is adequately disclosed under Signifi cant Accounting Policies 24(A) 7 (vii).
48th Annual Report 2013 - 14 26 MADRAS FERTILIZERS LIMITED
9 Reference is invited to Note 24(B)(ii) regarding accounting of FICC have not notifi ed the fi nal concession rates for 2013-14. a sum of Rs 32.99 crores towards escalation in input prices Hence the Company has realistically estimated the escalation which has been considered as receivable from Fertilizer as disclosed under the Signifi cant Accounting Policies - Note Industry Coordination Committee (FICC) for the year ended 24 (A) 10 (i) which is in line with principles and disclosure 31st March 2014 under New Pricing Scheme (NPS) for Urea. practices as stipulated in AS 9 (Revenue Recognition). Adjustments may arise in future in respect of the above on fi nal payment. 10 Reference is invited to Note 29(e) regarding balances in Adequate disclosure in this regard is made under note Long term borrowings from GOI, Trade Receivable/Payables, 29(e) annexed to Accounts. The Company has obtained Claim recoverable and loans and advances are subject to confi rmation from most of the high value debtors and creditors. confi rmation and consequential adjustments. Hence there is no possibility of consequential adjustments. The effect of Paragraphs 8, 9 &10, above on the profi t of the Company for the year ended 31st March 2014 is not ascertainable.
For B THIAGARAJAN & CO. For and on behalf of the Board of Directors Chartered Accountants FRN 004371S
CA. RAM SRINIVASAN Dr I VIJAYAKUMAR Partner Chairman & Managing Director M. No. 220112 July 28, 2014 July 30, 2014
48th Annual Report 2013 - 14 27 MADRAS FERTILIZERS LIMITED
INDEPENDENT AUDITOR’S REPORT audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness To the Members of Madras Fertilizers Limited of accounting policies used and the reasonableness of the accounting estimates made by management, as well Report on the Financial Statements as evaluating the overall presentation of the fi nancial 1. We have audited the accompanying fi nancial statements of statements. Madras Fertilizers Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2014, and the Statement 6. We believe that the audit evidence we have obtained is of Profi t and Loss and Cash Flow Statement for the year then suffi cient and appropriate to provide a basis for our audit ended and the summary of signifi cant accounting policies opinion. and other explanatory information. Basis for Qualifi ed Opinion Management’s Responsibility for the Financial 7. Reference is invited to Note 24(B)(iii) regarding Statements accounting of a sum of Rs 20.80 crores towards additional compensation under Nutrient Based Subsidy 2. Management is responsible for the preparation of these (NBS) for producing P&K fertilizers which has been fi nancial statements that give a true and fair view of the accrued as receivable from Department of Fertilizers fi nancial position, fi nancial performance and cash fl ows of (DOF) during the current fi nancial year ended 31st the Company in accordance with the Accounting Standards March 2014. As the proposal to extend the scheme for referred to in sub-section (3C) of section 211 of the Companies additional compensation is still under consideration by Act, 1956 (“the Act”) read with General Circular 15/2013 DOF as at the year end , in our opinion, the sum of Rs dated 13th September 2013 of the Ministry of Corporate 68.20 crores (including Rs 47.40 Crores pertaining to Affairs in respect of Section 133 of the Companies Act, 2013. previous year ended 31st March 2013) is not recoverable This responsibility includes the design, implementation and and to that extent has the effect of overstatement of maintenance of internal control relevant to the preparation profi t for the year ended 31st March 2014 and claims and presentation of the fi nancial statements that give a recoverable (forming part of Note 16 - Other Current true and fair view and are free from material misstatement, Assets) as at 31st March 2014 whether due to fraud or error. Paragraphs 7 has the effect of overstatement of the Auditor’s Responsibility current year’s profi t to the extent of Rs 20.80 crores 3. Our responsibility is to express an opinion on these fi nancial and has the effect of overstatement of net worth and statements based on our audit. We conducted our audit in overstatement of claims recoverable (forming part of accordance with the Standards on Auditing issued by the Note 16 - Other Current Assets) to the extent of Rs 68.20 Institute of Chartered Accountants of India. Those Standards Crores. require that we comply with ethical requirements and plan 8. Reference is invited to Note No. 24(A)(7)(vii) of the and perform the audit to obtain reasonable assurance about Signifi cant Accounting Policies of the Company whether the fi nancial statements are free from material regarding valuation of inventories, Ammonia is valued misstatement. at cost which is not in accordance with Accounting 4. An audit involves performing procedures to obtain audit Standard 2 (Valuation of Inventories) which requires evidence about the amounts and disclosures in the fi nancial inventory to be valued at lower of cost and Net Realisable statements. The procedures selected depend on the Value (NRV) auditor’s judgment, including the assessment of the risks of 9. Reference is invited to Note 24(B)(ii) regarding accounting material misstatement of the fi nancial statements, whether of a sum of Rs 32.99 crores towards escalation in input due to fraud or error. prices which has been considered as receivable from 5. In making those risk assessments, the auditor considers Fertilizer Industry Coordination Committee (FICC) for internal control relevant to the Company’s preparation and the year ended 31st March 2014 under New Pricing fair presentation of the fi nancial statements in order to design Scheme (NPS) for Urea. Adjustments may arise in future
48th Annual Report 2013 - 14 28 MADRAS FERTILIZERS LIMITED
in respect of the above on fi nal payment. 14. Further to our comments in Para 7 to 11 above, as required by section 227(3) of the Act, we report that: 10. Reference is invited to Note 29(e) regarding balances in Long term borrowings from GOI, Trade Receivable/ a. we have obtained all the information and explanations Payables, Claim recoverable and loans and advances are which to the best of our knowledge and belief were subject to confi rmation and consequential adjustments. necessary for the purpose of our audit; The effect of Paragraphs 8, 9 and 10 above on the profi t b. in our opinion proper books of account as required by of the Company for the year ended 31st March 2014 is law have been kept by the Company so far as appears not ascertainable. from our examination of those books; Emphasis of matter c. the Balance Sheet, Statement of Profi t and Loss, and Cash Flow Statement dealt with by this Report are in 11. Without qualifying our opinion, reference is invited to agreement with the books of account; Note 10(b) regarding value of land at Manali New Town in respect of which the Company is yet to acquire title as d. except for the effects of the matters described in the at the year end. ‘Basis for Qualifi ed Opinion’ paragraph, in our opinion, the Balance Sheet, Statement of Profi t and Loss, and Qualifi ed Opinion Cash Flow Statement comply with the Accounting 12. Subject to our comments in Para 7 to 11 above, in our Standards referred to in subsection (3C) of section 211 opinion and to the best of our information and according to of the Companies Act, 1956 read with General Circular the explanations given to us, the fi nancial statements give 15/2013 dated 13th September 2013 of the Ministry the information required by the Act in the manner so required of Corporate Affairs in respect of Section 133 of the and give a true and fair view in conformity with the accounting Companies Act, 2013; principles generally accepted in India: e. The Department of Company Affairs has clarifi ed that (a) in the case of the Balance Sheet, of the state of affairs of the the provisions of clause (g) of sub section (1) of Section Company as at March 31, 2014; 274 the Companies Act, 1956 are not applicable to Government Companies. (b) in the case of the Statement of Profi t and Loss, of the PROFIT for the year ended on that date; and For B THIAGARAJAN & CO. (c) in the case of the Cash Flow Statement, of the cash fl ows for Chartered Accountants the year ended on that date. Firm Regn. No. 004371S
Report on Other Legal and Regulatory Requirements Ram Srinivasan 13. As required by the Companies (Auditor’s Report) Order, Chennai Partner 2003 (“the Order”) issued by the Central Government of India July 28, 2014 M No. 220112 in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the Order.
48th Annual Report 2013 - 14 29 MADRAS FERTILIZERS LIMITED
ANNEXURE TO AUDITORS’ REPORT granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained (Referred to in paragraph 13 of the Auditors’ Report of even date under Section 301 of the Act during the year. to the members of MADRAS FERTILIZERS LIMITED on the (b) The company has not taken any loans, secured or fi nancial statements for the year ended March 31, 2014). unsecured from fi rms, or other parties covered in the 1. (a) The company has maintained proper records showing register maintained under Section 301 of the Act. full particulars including quantitative details and situation 4. In our opinion and according to the information and of fi xed assets. explanations given to us, there are adequate internal control (b) As per the information and explanations given to us, procedures, commensurate with the size of the company and physical verifi cation of fi xed assets has been carried the nature of its business with regard to purchase of inventory out in terms of the phased programme of verifi cation and fi xed assets and for the sale of goods and services. adopted by the company, i.e. once in three years by During the course of our audit, no major weaknesses have an independent fi rm of Chartered Accountants which been noticed in the internal control systems. in our opinion is reasonable having regard to the size 5. (a) According to the information and explanations of the Company and nature of its assets. We have provided by the management, there are no contracts been informed that discrepancies noticed on physical or arrangements that need to be entered in the verifi cation if fi xed assets carried out in the past, other register maintained in pursuance of Section 301 of the than what has been subsequently located, as compared Companies Act, 1956. Accordingly Clause 4(v)(a) & (b) to the books and records were not material. of the Order are not applicable. (c) During the year the company has not disposed off any 6. In our opinion, the Company has complied with the provisions substantial / major part of fi xed assets. of Section 58A and other relevant provisions of the Act with 2. (a) Physical verifi cation of inventories inside factory regard to deposits accepted from public. During the year, the premises has been carried out by the management at Company has not accepted any fi xed deposits from public. reasonable intervals and the physical verifi cation of Based on records produced to us, there has not been any stocks of stores and spare parts has been conducted default on payment of deposits and hence provisions of by an independent fi rm of Chartered Accountants in a Section 58AA of the Companies Act are not attracted. phased manner so as to complete the verifi cation of all 7. The Company has an in-house formal internal audit system, items over a period of three years. Finished goods are which in our opinion, is required to be strengthened by taken as per warehousing certifi cates. In our opinion, taking into account the size and nature of its business with the frequency of verifi cation of inventory is reasonable. professionally qualifi ed persons. However, internal controls Warehousing certifi cates has not been received in a few and checks are adequate and the frequency of such checks cases, which however is not signifi cant in value. is in line with the generally accepted procedures. (b) In our opinion and according to the information and 8. We have broadly reviewed the books of account maintained explanations given to us, the procedures for physical by the Company in respect of products pursuant to the order verifi cation of inventory followed by the management of Central Government for maintenance of cost records were reasonable and adequate in relation to the size of prescribed under Section 209(1)(d) of the Companies Act, the Company and the nature of its business. 1956 and are of the opinion that prima facie the prescribed (c) In our opinion, the company has maintained proper accounts and records have been made and maintained. records of inventory. In our opinion, discrepancies However, we are not required to and have not carried out noticed on physical verifi cation of stocks were not any detailed examination of such records. material in relation to the operations of the Company and 9. (a) According to the records provided to us, the company the same have been properly dealt with in the books of is generally regular in depositing with the appropriate account. authorities, undisputed statutory dues to ESI, EPS, 3. (a) As per information furnished to us, the Company has not Excise duty, customs duty, Sales Tax, Income tax,
48th Annual Report 2013 - 14 30 MADRAS FERTILIZERS LIMITED
Provident Fund contribution, service tax and other (c) According to the information and explanations given to material statutory dues applicable to it. We are informed us, there are no disputed demands in respect of Income that the Company has no liability towards wealth tax, tax, Service tax, Sales tax, Customs duty, Excise duty Cess and Investor education and protection fund. Sales Tax, Income tax, Provident Fund contribution and other material statutory dues as applicable, which have (b) According to the information and explanations given to us, been deposited with the relevant statutory authority. there are no undisputed demands in respect of Income However, according to information and explanations tax, Service tax, Sales tax, Customs duty, Excise duty given to us, disputed dues of excise duty and Tamil Nadu Sales Tax, Income tax, Provident Fund contribution and General Sales Tax which have been deposited by the other material statutory dues as applicable which were in Company and disputed dues of Customs duty, Kerala arrears as at 31st March 2014 for a period of more than Value Added Taxes and Employees State Insurance Act six months from the date they became payable, which which have not been deposited by the Company are have not been deposited with the relevant statutory given below: authority.
Forum where S Period of Amount Name of the statute Nature of dues/demand dispute is No dispute (` lakhs) pending 1. Central excise act, 1944 With regard to dispute on levy of excise 1995 542.25 CESTAT duty for the period from 26.08.1995 to 16.11.2006 2. Tamil Nadu General Sales tax Levy of additional tax @ 1% u/s 3(4) of 2003 47.05 Sales tax act, 1959 TNGST Act 1995 -96 and 1996-97 appellate Tribunal 3. Customs Act Differential customs duty claimed by 1998 6586.00 Commissioner Commissioner of Customs of Customs (Appeals) 4. Kerala Value Added Taxes Levy of VAT on subsidy 2009-10 510.57 High Court of 2010-11 Kerala 5. Employees Provident Fund and Penalty for late remittance 1995-96 to 10.97 High Court of Misc. Provisions Act, 1952 1996-97 Madras 6. Employees State Insurance Act, Belated remittance of contribution and Apr 92’ to Sep 95’ 62.77 ESI Court 1948 levy of interest Jan 97’ to Jul 99’ 1999-00 2000-01
Subject to the effect of our comments in Paragraphs 7 to has not defaulted in repayment of dues to its fi nancial 10 described in the ‘Basis for Qualifi ed Opinion’ of the main institutions and banks. audit report, the Company has accumulated losses as at 12. Based on our examination and according to the information the end of the fi nancial year of Rs 380.72 crores which has and explanations given to us, the Company has not granted exceeded 50 per cent of the net worth. Subject to the effect of loans and advances on the basis of security by way of pledge our comments in Paragraphs 7 to 10 described in the ‘Basis of shares and other securities. for Qualifi ed Opinion’ of the main audit report, the Company 13. The Company is not a Chit / Nidhi / Mutual benefi t fund / has not incurred cash losses in the fi nancial year and in the Society and as such clause (xiii) of the Order is not applicable. immediately preceding fi nancial year. 14. The Company is not dealing or trading in shares, securities, 11. Based on our verifi cation and according to the information debentures and other investments. Therefore provisions of and explanations given by the management, the Company Clause (xiv) of paragraph 4 of the order are not applicable.
48th Annual Report 2013 - 14 31 MADRAS FERTILIZERS LIMITED
15. In our opinion and according to the information and 20. The Company has not raised any money by public issue explanation given to us, the Company has not given any during the year. guarantee for loans taken by others from banks / fi nancial 21. During the course of examination of the books and records institutions. Therefore, clause (xv) of paragraph 4 of the of the Company carried out in accordance with the generally Order is not applicable. accepted auditing procedures in India, and according to the 16. According to the information and explanations given to us, no information and explanations given to us, we have neither fresh term loans were raised during the fi nancial year. come across any instance of fraud on or by the Company, noticed or reported during the year, nor have been informed 17. On the basis of our examination of books and records of such cases by the management. provided and the basis of explanation provided to us and on an overall examination of the balance sheet of the Company, we report that no short term funds have been used for long For B THIAGARAJAN & CO. term purposes. Chartered Accountants 18. The company has not allotted any shares on preferential Firm Regn. No. 004371S basis to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956. Ram Srinivasan 19. During the year, the company has not issued any secured Chennai Partner debentures. July 28, 2014 M No. 220112
48th Annual Report 2013 - 14 32 MADRAS FERTILIZERS LIMITED
BALANCE SHEET as at March 31, 2014 ( Note 1) (` Crores) March 31, March 31, Notes 2014 2013 I EQUITY AND LIABILITIES SHAREHOLDERS’ FUNDS Share Capital 3 162.14 162.14 Reserves and Surplus 4 (368.33) (468.37) (206.19) (306.23) NON CURRENT LIABILITIES . Long Term Borrowings 5 229.22 261.91 Deferred Tax Liabilities(Net) - - Long Term Trade Payables 6a - - Other Long Term Liabilities 6b - - Long Term Provisions 7a 18.03 19.53 247.25 281.44 CURRENT LIABILITIES Short Term Borrowings 8 235.66 44.59 Short Term Trade Payables 9a 690.06 233.51 Other Current Liabilities 9b 763.14 653.92 Short Term Provisions 7b 5.64 6.58 1694.50 938.60
TOTAL 1735.56 913.81
II ASSETS NON CURRENT ASSETS Fixed Assets Tangible Assets 10 i. Gross Block 943.82 938.54 ii. Less : Depreciation Reserve 748.59 706.94 Net Block 195.23 231.60 Capital Work- in- progress 17.29 15.45 Dismantled Assets 0.99 1.20 c/o 213.51 248.25
48th Annual Report 2013 - 14 33 MADRAS FERTILIZERS LIMITED
BALANCE SHEET as at March 31, 2014 ( Note 1) (contd) (` Crores) March 31, March 31, Notes 2014 2013 b/f 213.51 248.25 Non Current Investments 11 0.40 0.40 Deferred Tax Assets(Net) - - Long Term Loans and Advances 12a 14.56 10.73 Long Term Trade Receivables 13a - -
CURRENT ASSETS Inventories 14 223.70 307.45 Short Term Trade Receivables 13b 0.09 3.73 Cash and cash equivalents 15 22.76 5.82 Short Term Loans and Advances 12b 12.64 16.01 Other Current Assets 16 1247.90 321.42 TOTAL 1735.56 913.81
Notes 1 to 29 form part of these fi nancial statements.
/For and on behalf of the Board/
Dr. I VIJAYAKUMAR K.M. GUPTA V MURALIDHARAN Chairman and Managing Director Director General Manager - Finance & Accounts and Company Secretary
May 26, 2014
As per our Report of even date For B THIAGARAJAN & CO. Chartered Accountants FRN 004371S
CA RAM SRINIVASAN Partner May 26, 2014 M No 220112
48th Annual Report 2013 - 14 34 MADRAS FERTILIZERS LIMITED
STATEMENT OF PROFIT AND LOSS for the year ended March 31, 2014 (Note 2) (` Crores) Notes 2013-14 2012-13 I Revenue from operations Gross Sales 17 362.08 424.12 Less: Excise Duty 3.58 4.26 358.50 419.86 Subsidy - Urea 2166.99 1751.40 - NPK 67.98 175.03 2234.97 1926.43 II Other Income 18 12.50 8.82
III Total Revenue (I+II) 2605.97 2355.11 IV Expenses : Cost of materials consumed 19a 2082.06 2054.24 Purchase of Stock-in-Trade 19b 6.78 3.37 Changes in inventories of fi nished goods, work-in-progress and Stock-in-trade 20 59.49 (37.91) Employee benefi t expenses 21 87.93 73.89 Finance costs 22 82.79 73.61 Depreciation and amortization expense 42.41 41.73 Other Expenses 23 138.71 121.74 Total Expenses 2500.17 2330.67
V Profi t before exceptional/extraordinary items and tax (III-IV) 105.80 24.44 VI Exceptional Items - - VII Profi t before extraordinary items and tax (V-VI) 105.80 24.44 VIII Extraordinary Items - - IX Profi t before tax (VII-VIII) 105.80 24.44 X Tax expense: - Current Tax 5.76 - - Deferred Tax - - XI Profi t/(loss) for the period from continuing operations (IX-X) c/o 100.04 24.44
48th Annual Report 2013 - 14 35 MADRAS FERTILIZERS LIMITED
STATEMENT OF PROFIT AND LOSS for the year ended March 31, 2014 (Note 2) (Contd.,) (` Crores) Notes 2013-14 2012-13 b/f 100.04 24.44 XII Profi t/(loss) for the period from discontinuing operations - - XIII Tax expense of discontinuing operations - - XIV Profi t/(loss) for the period from discontinuing operations after tax (XII-XIII) - -
XV Profi t/(Loss) for the period (XI+XIV) 100.04 24.44
XVI Earnings Per Equity Share Profi t/(Loss) available to members (` Crores) 100.04 24.44 Weighted Average Number of Equity Shares used as denominator for calculating EPS 16,11,01,300 16,11,01,300
Basic & Diluted in ` per share 6.21 1.52
Notes 1 to 29 form part of these fi nancial statements.
/For and on behalf of the Board/
Dr. I VIJAYAKUMAR K.M. GUPTA V MURALIDHARAN Chairman and Managing Director Director General Manager - Finance & Accounts and Company Secretary
May 26, 2014
As per our Report of even date For B THIAGARAJAN & CO. Chartered Accountants FRN 004371S
CA RAM SRINIVASAN Partner May 26, 2014 M No 220112
48th Annual Report 2013 - 14 36 MADRAS FERTILIZERS LIMITED
NOTES TO FINANCIAL STATEMENT for the year ended March 31, 2014
(` Crores) March 31, March 31, 3 SHARE CAPITAL 2014 2013
AUTHORISED SHARES 17,50,00,000 Equity Shares of ` 10 each 175.00 175.00 19,00,00,000 Preference Shares of ` 10 each 190.00 190.00 365.00 365.00 ISSUED SHARES 16,59,98,200 Equity Shares of ` 10 each 166.00 166.00 166.00 166.00 SUBSCRIBED AND PAID-UP SHARES 16,11,01,300 Equity Shares of ` 10 each fully paid up 161.10 161.10
FORFEITED SHARES 20,76,600 Equity Shares of ` 5 paid up 1.04 1.04 162.14 162.14 a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period
Equity Shares March 31, 2014 March 31, 2013 No. of Shares (` Crores) No. of Shares (` Crores) At the beginning of the period 16,11,01,300 161.10 16,11,01,300 161.10 Issued during the period - - - - Outstanding at the end of the period 16,11,01,300 161.10 16,11,01,300 161.10 Add: Shares Forfeited at the beginning of the period 20,76,600 1.04 20,76,600 1.04 16,31,77,900 162.14 16,31,77,900 162.14 b. The Company has only one class of Equity Shares having a par value of ` 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend if proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting. During the year ended March 31, 2014, the amount of per share dividend recognised as distribution to equity shareholders was ` Nil (March 31, 2013 ` Nil) In the event of liquidation of the Company the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the Shareholders.
48th Annual Report 2013 - 14 37 MADRAS FERTILIZERS LIMITED
c. Details of shareholders holding more than 5% shares in the Company
March 31,2014 March 31,2013 No. of Shares % Holding No. of Shares % Holding Equity Shares of ` 10 each fully paid Government of India 9,58,51,700 59.50 9,58,51,700 59.50 Naftiran Intertrade Co. Ltd 4,15,16,500 25.77 4,15,16,500 25.77
(` Crores) March 31, March 31, 2014 2013 4 RESERVES AND SURPLUS Securities Premium Account Balance as per last fi nancial statement 12.39 12.39 Add: Additions during the period - - Less: Amount utilised - - Closing Balance 12.39 12.39
Surplus/(Defi cit) in the Statement of Profi t & Loss Balance as per last fi nancial statement (480.76) (505.20) Profi t for the year 100.04 24.44 Net Surplus/(Defi cit) in the Statement of Profi t & Loss (380.72) (480.76)
(368.33) (468.37) 5 LONG TERM BORROWINGS UNSECURED GOI Loan - Non Current Portion 229.22 261.91 Current portion of GOI Loans overdue and due within one year is shown under Note 9b - Other Current Liabilities. 229.22 261.91
6a LONG TERM TRADE PAYABLES -- -- 6b OTHER LONG TERM LIABILITIES Advances from Marketers/Dealers - - - -
48th Annual Report 2013 - 14 38 MADRAS FERTILIZERS LIMITED
(` Crores) March 31, March 31, 2014 2013 7a LONG TERM PROVISIONS Provisions for Employee Benefi ts Retired Medical Benefi ts 0.99 0.90 Service Awards 0.28 0.25 Gratuity 8.23 10.26 Leave Encashment 8.53 8.12 18.03 19.53 7b SHORT TERM PROVISIONS Provisions for Employee Benefi ts Retired Medical Benefi ts 0.16 0.14 Gratuity 2.91 4.33 Leave Encashment 2.55 2.11 Service Awards 0.02 - 5.64 6.58 8 SHORT TERM BORROWINGS SECURED Cash Credit from Banks - 23.17 44.59 Secured by hypothecation of Inventories and book debts including GOI subsidy receivable with fi rst charge on all immovable properties at Manali both present and future. Bills Accepted under L/C : 212.49 - 235.66 44.59 9a SHORT TERM TRADE PAYABLES Trade Payables -Secured -Ref Note 24(B)(ix)(x) 136.98 145.35 -UnSecured - Ref Note 29(d) - SBA 496.50 - -UnSecured - Others 56.58 88.16 690.06 233.51 9b OTHER CURRENT LIABILITIES UNSECURED GOI Loan - Current Portion Principal 325.02 292.33 Interest accured and due 329.75 273.87 654.77 566.20 Investor Education and Protection Fund Unclaimed Deposits 0.10 0.13 Amount to be transferred to Investor Education and Protection Fund - - Interest accrued but not due on loans 15.55 16.85 Micro, Small & Medium Enterprises 0.11 0.09 Other Liabilities 92.61 70.65 763.14 653.92
48th Annual Report 2013 - 14 39 MADRAS FERTILIZERS LIMITED
10. TANGIBLE ASSETS (` Crores) GROSS BLOCK AT COST DEPRECIATION NET BLOCK AS ON ASSET UPTO Mar 31, 2013 Addition Deduction Mar 31, 2014Mar 31, 2014 Mar 31, 2014 Mar 31, 2013
LAND * 1.82 - - 1.82 - 1.82 1.82
ROAD, BRIDGES AND 3.56 - - 3.56 0.99 2.57 2.63 OTHER FACILITIES
RAILWAY SIDING ** 1.22 - - 1.22 1.10 0.12 0.13
BUILDINGS 14.16 - - 14.16 8.14 6.02 6.36
PLANT & MACHINERY 896.90 5.34 0.20 902.04 724.69 177.35 213.24
AUTOMOTIVE & 8.84 0.10 0.48 8.46 6.05 2.41 2.54 SERVICE EQUIPMENT
LAB EQUIPMENT 4.76 0.04 - 4.80 2.05 2.75 2.91
OFFICE EQUIPMENT 5.03 0.16 0.01 5.18 3.55 1.63 1.79 FURNITURE & FITTINGS1.40 0.26 0 1.66 1.36 0.30 0.05
AIRCONDITIONERS AND 0.85 0.16 0.09 0.92 0.66 0.26 0.13 WATERCOOLERS
938.54 6.06 0.78 943.82 748.59 195.23 231.60
CAPITAL WORK-IN- 15.45 7.45 5.61 17.29 - 17.29 15.45 PROGRESS (AT COST)
DISMANTLED ASSETS + 0.99 1.20
TOTAL 953.99 13.51 6.39 961.11 748.59 213.51 248.25
PREVIOUS YEAR 925.20 74.00 45.21 953.99 706.94
* Includes (a) ` 0.12 Cr being payment for 297.75 acres out of 329.40 acres handed over to the Company by the Tamilnadu Government and is subject to communication of fi nal value by the Government. (b) ` 0.51 Cr being payment made for about 78 grounds of land allotted by Chennai Metropolitan Development Authority, the title for which has not yet been passed to the Company. ** Includes ` 0.08 Cr representing 5/24 share of total cost of the Railway Siding commonly used by Chennai Petroleum Corporation Limited, Madras Fertilizers Limited, Madras Petrochem Limited, Steel Authority of India Limited and Rashtriya Ispat Nigam Limited. + Dismantled Assets held for sale - valued at lower of WDV or estimated realisation. (c) For Asset wise details of depreciation charged during the year 2013-14, refer note 24(B)(i)
48th Annual Report 2013 - 14 40 MADRAS FERTILIZERS LIMITED
(` Crores) March 31, March 31, 2014 2013 11 NON CURRENT INVESTMENTS (NON TRADED)
UNQUOTED EQUITY INSTRUMENTS Indian Potash Limited (7,92,000 Equity Shares of ` 10 each fully paid-including 3,96,000 Bonus shares) 0.40 0.40 Fortune Bio-Tech Ltd (12,50,000 Shares of ` 10 each fully paid) 1.25 1.25 Less: Provision made 1.25 1.25 - - 0.40 0.40 12a LONG TERM LOANS AND ADVANCES (Unsecured and considered good unless otherwise stated) Secured Loans 0.25 0.37 Deposits with Government Departments and Others 11.83 9.07 Balances with Customs, Port Trust and Excise Authorities 2.48 1.29 14.56 10.73 12b SHORT TERM LOANS AND ADVANCES Advances recoverable in Cash or in kind or for value to be received 12.64 16.01 12.64 16.01 13a LONG TERM TRADE RECEIVABLES Debts due for more than six months - - Considered Good in respect of which Company is fully Secured - - Considered Good in respect of which Company holds no Security other than the debtor’s personal security - - - - 13b SHORT TERM TRADE RECEIVABLES Considered Good in respect of which Company is fully Secured 0.09 3.73 Considered Good in respect of which Company holds no Security other than the debtor’s personal security - - Considered Doubtful - Unsecured 4.46 4.47 4.55 8.20 Less: Provision for Doubtful Debts 4.46 4.47 0.09 3.73
48th Annual Report 2013 - 14 41 MADRAS FERTILIZERS LIMITED
(` Crores) March 31, March 31, 2014 2013 14 INVENTORIES (As certifi ed by Management based on technical estimate) Raw Materials on hand 80.31 112.35 Work-in-Progress 37.52 81.77 Finished Products Manufactured Stock Fertilizers 0.01 15.25 Stores and Spares On hand 93.30 81.09 In Transit 3.58 8.24 Loose Tools 0.26 0.24 Others Catalysts 6.01 6.01 Packing Materials 2.71 2.50 223.70 307.45
15 CASH AND CASH EQUIVALENTS Cash on hand 0.07 0.07 Balances with scheduled banks In Current Account 0.02 1.06 In Term Deposit 22.67 4.69 22.76 5.82
16 OTHER CURRENT ASSETS Claims Recoverable – Ref Note 29(d) 1248.91 322.43 Less: Provision made 1.01 1.01 1247.90 321.42
48th Annual Report 2013 - 14 42 MADRAS FERTILIZERS LIMITED
(` Crores) 2013-14 2012-13 17 GROSS SALES Manufactured Products : Fertilizers Urea 259.21 220.01 NPK 17-17-17 90.58 195.86 NPK 20-20-0-13 - - Biofertilizers 0.44 1.14 Carbon-di-oxide 3.65 3.04 Bought Products : Agro Chemicals 1.94 1.46 Organic Manure 6.26 2.61 362.08 424.12
18 OTHER INCOME
Dividend 0.20 0.20 Interest from Banks and Others 0.92 1.35 Profi t on Sale of Assets 0.48 0.62 Rent 1.25 1.21 Insurance claims 0.04 0 Miscellaneous Income 9.61 5.44 12.50 8.82 19a COST OF MATERIALS CONSUMED Raw Materials Opening Stock 112.35 147.08 Add: Purchases 1353.05 1352.83 1465.40 1499.91 Less: Closing Stock 80.31 112.35 Total Consumption of Raw materials 1385.09 1387.56 Power, Water & Fuel 657.33 621.82 Stores, Spares & Packing Materials 39.64 44.86 2082.06 2054.24
48th Annual Report 2013 - 14 43 MADRAS FERTILIZERS LIMITED
(` Crores) 2013-14 2012-13 19b PURCHASE OF STOCK-IN-TRADE Agrochemicals 1.31 0.99 Organic Manure 5.47 2.38 6.78 3.37 20 CHANGES IN INVENTORIES OF FINISHED GOODS, WORK IN PROGRESS AND STOCK IN TRADE Opening Stock Finished goods 15.25 6.55 Work in progress 81.77 52.56 97.02 59.11 Less : Closing Stock Finished goods 0.01 15.25 Work in progress 37.52 81.77 37.53 97.02 59.49 (37.91) 21 EMPLOYEE BENEFIT EXPENSES Salaries, Wages and Bonus 63.12 59.32 Contribution to Provident Fund, Superannuation and Gratuity 14.02 11.06 Staff Welfare Expenses 10.79 3.51 87.93 73.89 22 FINANCE COSTS Interest on Term Loans GOI Loan 54.58 55.88 Other Borrowings Bank Borrowings 18.11 9.98 Others 8.53 6.09 Cash Discount 1.57 1.66 82.79 73.61
48th Annual Report 2013 - 14 44 MADRAS FERTILIZERS LIMITED
(` Crores) 2013-14 2012-13 23 OTHER EXPENSES Repairs and Maintenance Plant and Machinery 33.97 43.90 Buildings 1.11 0.54 Other Assets 0.41 0.24 35.49 44.68 Transportation and Warehousing Transportation and Warehousing 56.34 45.77 Secondary freight 1.10 3.01 Warehouse Rent 0.44 0.32 57.88 49.10 Payment to Statutory Auditors Statutory Audit 0.03 0.02 Tax Audit 0.01 0.01 Certifi cation 0.09 0.05 0.13 0.08 Volume/Special Rebate 1.19 1.84 Rent 0.42 0.52 Rates and Taxes 0.62 0.81 Insurance 2.93 1.14 Directors' Expenses 0.07 0.06 Agro Services / Information Expenses 0.07 0.09 Advertising and Publicity 1.40 0.61 Provision for Bad and Doubtful debts (0.01) - Exchange Rate Fluctuation 0.96 2.11 Miscellaneous Expenses 37.56 20.70 138.71 121.74
48th Annual Report 2013 - 14 45 MADRAS FERTILIZERS LIMITED
24 (A) SIGNIFICANT ACCOUNTING POLICIES 1 GENERAL The fi nancial statements are prepared under the historical cost convention and on going concern basis. These statements have been prepared in accordance with i) applicable Accounting Standards (AS), ii) requirements of Companies Act, 1956 and iii) the Accounts Manual of the Company. 2 FIXED ASSETS Fixed Assets are stated at cost of acquisition / construction less accumulated depreciation. Cost is inclusive of freight, installation, duties, other incidental expenses, allocated Expenditure during Construction, initial catalysts, mandatory / insurance spares acquired along with the machinery and interest on borrowed funds attributable to construction or acquisition for the period upto the capitalisation of the respective asset as reduced by liquidated damages. Borrowing costs that are directly attributable to the acquisition / construction of an asset is capitalised as part of the cost of that asset when it is probable that they will result in future economic benefi ts to the enterprise and the costs can be measured reliably. Assets acquired under Hire Purchase Agreements are capitalised to the extent of Principal value, while Hire charges are charged to revenue in the year in which they are payable. Expenditure on Tangible Assets on revamp / expansion are capitalised when the respective Plants are ready for commercial production (i.e. when the Plant achieves 50% capacity utilisation) and in respect of other assets when they are ready for use. 3 DEPRECIATION Depreciation on Tangible Assets is provided for in conformity with the provisions of Schedule XIV to the Companies Act, 1956 on Straight Line Method by leaving a residual value of 5% in respect of Plant and Machinery and ` 1 in respect of other tangible assets. Assets costing not more than ` 5,000 each are depreciated in full in the year of addition by leaving a residual value of ` 1. 4 NON CURRENT INVESTMENTS Non Current Investments are stated at cost. Any diminution in the value of Non Current Investments, other than temporary in nature, are provided for. 5 EXPENDITURE DURING CONSTRUCTION Expenditure during construction awaiting capitalization to Tangible Assets excluding capital advances is included under Capital Work in Progress and shown separately under Tangible Assets Note. 6 GRANTS Grants from Government are shown as a deduction from the gross value of tangible assets / capital work in progress. 7 INVENTORY VALUATION (i) Raw materials and packing materials are valued at cost on FIFO basis. (ii) Stores, spares and catalysts are valued at cost on monthly moving weighted average basis. (iii) Loose tools and reconditioned spares are revalued on WDV basis annually. (iv) Finished products are valued at lower of cost or net realisable value including fi nal / estimated subsidy.
48th Annual Report 2013 - 14 46 MADRAS FERTILIZERS LIMITED
Net realisable value is taken as under : Phosphatic and Potassic Fertilizers Field warehouse inventories: The Least of selling price fi xed by the Company to Marketers / Dealers including Excise Duty. Field warehouse inventories to be brought back to Plant for reprocessing: The least of selling price fi xed by the Company to Marketers / Dealers plus fi nal / estimated Nutrient Based Subsidy (NBS) less estimated reprocessing costs and freight incurred. Inventories in transit : The least of selling price fi xed by the Company to Marketers / Dealers including Excise Duty plus fi nal / estimated NBS less estimated warehousing expenses. Inventories at Plant ready for sale : The least of selling price fi xed by the Company to Marketers / Dealers plus fi nal / estimated NBS less estimated freight and warehousing expenses. Urea Field warehouse inventories: The Least of selling price to Marketers / Dealers including Excise Duty. Inventories in transit : The least of selling price to Marketers / Dealers including Excise Duty plus fi nal / estimated subsidy less estimated warehousing expenses. Inventories at Plant ready for sale : The least of selling price to Marketers / Dealers plus fi nal / estimated subsidy less estimated freight and warehousing expenses. Bulk Urea at Plant : Least of selling price to Marketers / Dealers plus fi nal / estimated subsidy less estimated bagging, freight and warehousing expenses. (v) Warehousing expenses have been distributed over sales and closing stock. (vi) The Company has adopted FIFO method of valuation for raw materials and packing materials content in the inventory of fi nished products. (vii) Ammonia is valued at cost as the same is captively consumed and not intended for sale. (viii) Off-spec products intended for disposal are valued at estimated realizable value. (ix) Inventory of traded products are valued at lower of location specifi c cost or net realizable value. Agrochemicals inventory is valued on FIFO method, which includes purchase cost and other related expenses. (x) Inventory of Pesticides manufactured and lying at factory under Loan Licensing Scheme are valued at cost excluding Excise Duty. (xi) Goods in Transit / Under Inspection are valued at cost. 8 TRADE RECEIVABLES / LOANS AND ADVANCES Trade Receivables, Loans and Advances are reviewed periodically and provision is made for debts considered doubtful of recovery. 9 GROSS SALES Gross Sales is net of sales return, dealers’ / marketers’ margin, Sales Tax (VAT) collected outside the State of Tamil Nadu and includes applicable Excise Duty for Fertilizers.
48th Annual Report 2013 - 14 47 MADRAS FERTILIZERS LIMITED
10 SUBSIDY (i) Urea Subsidy under New Pricing Scheme is accounted on receipt at the warehouses per procedure prescribed by the Government. Credit / Debit for Annual Escalation / De-escalation in input prices is considered based on realistic estimates pending issue of notifi cation by the Government. Adjustments are effected in respect of difference, if any, in the year of receipt. (ii) Subsidy for Phosphatic and Potassic fertilizers is accounted in line with the Nutrient Based Subsidy (NBS) policy of the Government. Credit for additional subsidy for using costlier inputs is considered based on realistic estimates pending issue of notifi cation by the Government. Adjustments are effected in respect of difference, if any, in the year of receipt. 11 FOREIGN CURRENCY TRANSACTIONS All transactions made during the year in foreign currency are recorded in the reporting currency by applying to the foreign currency amount the exchange rate on the initial recognition date. Foreign currency transactions settled after initial recognition date and other transactions remaining unsettled at the end of the accounting period are translated at the exchange rate on the date of settlement or prevalent at the end of accounting period as the case may be. Gains and losses relating to foreign exchange transactions are recognised in the profi t and loss statement. 12 EMPLOYEE BENEFIT EXPENSES (i) Short Term Benefi ts Short Term Employee Benefi ts are accounted on accrual basis. (ii) Post-employment Benefi ts and other Long Term Employee Benefi ts a. These are limited to and provided / paid in line with the DPE guidelines. b. The Company’s contribution to the provident fund is remitted to a separate trust established for the purpose based on a fi xed percentage of the eligible employees’ salary and charged to Profi t and Loss statement on accrual basis. Shortfall, if any, on the Government specifi ed minimum rate of return, will be made good by the Company and charged to Profi t and Loss statement. c. The Company operates defi ned benefi t plan for gratuity. The cost of providing such defi ned benefi t is determined using the projected unit credit method of actuarial valuation made at the end of the year and is administered through a fund maintained by Life Insurance Corporation of India. Actuarial gains / losses are charged to Profi t and Loss statement. d. The liability of the Company in respect of superannuation scheme is restricted to the fi xed contribution paid by the Company on an annual basis towards the defi ned contribution scheme maintained by Life Insurance Corporation of India, which is charged to Profi t & Loss statement on accrual basis. e. Obligations on post retirement medical benefi ts, compensated absences and service awards are provided using the projected unit credit method of actuarial valuation made at the end of the year. (iii) Termination Benefi ts Payment made to the employees under voluntary retirement scheme is treated in line with the revised AS-15 (Employee Benefi ts). 13 CLAIMS (i) Claims by the Company on underwriters are accounted as income on acceptance, pending settlement. (ii) Claims on railways are accounted on settlement. (iii) Claims for liquidated damages against suppliers / contractors are accounted for on recovery of the same from their bills and adjusted to the cost of assets or to the materials / works as the case may be. (iv) All other liquidated damages / penalties are accounted on realization basis.
48th Annual Report 2013 - 14 48 MADRAS FERTILIZERS LIMITED
14 PRIOR PERIOD ADJUSTMENTS Income/Expenditure which arise in the current year as a result of errors or omissions in the preparation of fi nancial statements of earlier years are treated as prior period adjustments. 15 CONTINGENT LIABILITY Depending on facts of each case and after due evaluation of relevant legal aspects, claims against the Company not acknowledged as debts are included under and disclosed as contingent liabilities. 16 TAXES a) Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961. b) Deferred tax assets are not recognized unless, in the management judgment there is a virtual certainty supported by convincing evidence that suffi cient future taxable income will be available against which such deferred tax assets can be realized. c) Accounting of value added tax is in line with the provisions of statute in force. 24 (B) NOTES ON ACCOUNTS i. DEPRECIATION Details of Depreciation provided during the year: 2013-14 2012-13 (`) (`) Roads, Bridges and other facilities 5,80,128 3,92,481 Railway Siding 78,513 78,513 Buildings 34,57,172 34,65,530 Plant and Machinery 41,22,86,469 40,67,43,536 Automotive and Service Equipment 21,68,725 19,57,924 Laboratory Equipment 19,70,439 18,62,820 Offi ce Equipment 31,07,771 24,60,663 Furniture and Fittings 1,41,419 70,224 Air Conditioners and Water Coolers 2,65,909 2,79,538 42,40,56,545 41,73,11,229 ii. SUBSIDY UNDER NEW PRICING SCHEME (NPS) FOR UREA Escalation / De-escalation in input prices is subject to annual revision based on the actual prices. Accordingly, a sum of ` 32.99 Cr (Previous year ` 37.72 Cr) has been reckoned as receivable from FICC for the year 2013-14 towards annual escalation of input prices in line with the Accounting policy – Note 24 (A) 10 (i). iii. NUTRIENT BASED SUBSIDY (NBS) FOR PHOSPHATIC AND POTASSIC FERTILIZERS The NBS dues reckoned as receivable from DOF for using costlier inputs is ` 20.80 Cr (Previous year ` 47.40 Cr) in line with the Accounting policy – Note 24 (A) 10 (ii). iv. EXCHANGE RATE FLUCTUATION Exchange rate fl uctuation included in other expenses is ` 0.96 Cr (Previous year ` 2.11 Cr) v. CENTRAL EXCISE 25/70 NOTIFICATION The Company has pre deposited ` 2 Cr on 11.03.2013 based on the Miscellaneous Order of CESTAT for taking up the appeal for hearing which is yet to take place.
48th Annual Report 2013 - 14 49 MADRAS FERTILIZERS LIMITED
As the matter is subjudice, no provision is considered necessary in the Books by the Company. However the same is shown under “Contingent Liability”. vi. As defi ned under AS - 28 on “Impairment of Assets” a detailed valuation has been done by a reputed Chartered Engineer and Valuer. As per his report, no adjustment towards impairment loss is considered necessary by the Company as on 31.03.2014. Net selling price of the major Plant and Machinery has been assessed against the book value on that date as detailed below: (` Cr) As on 31.3.2014 As on 31.3.2013 Sl. No. Plant Net selling price Book Value Net selling price Book Value 1 Ammonia 278.89 118.20 292.69 145.53 2 Urea 62.30 30.82 63.97 36.15 3 NPK 10.64 7.89 11.88 9.32 4 Utilities 21.35 15.70 21.85 17.13 Per AS – 28, net recoverable amount is the higher of net selling price or value in use. As the value in use could not be assessed with reasonable accuracy, the Company has considered net selling price for ascertaining impairment loss. vii. The Company has leased out its Bio-fertilizer Plant at Vijayawada, having a written down value of ` 28.91 lacs (Previous year ` 30.23 lacs). The depreciation recognized in the books during the year for the above asset is ` 1.10 lacs (previous year ` 1.10 lacs). The lease rent received during the year is ` 1.33 Lacs (Previous year ` 1.04 Lacs) The future lease rent receivable for each of the following periods are: (` Lacs) 31.03.14 31.03.13 a) Within 1 year - 2.35 - b) Later than 1 year and not later than 5 years - 9.04 - c) Later than 5 years - NIL NIL viii. The total amount payable to Micro, Small and Medium Enterprises as defi ned under Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2014 as identifi ed by the Management and relied upon by the Auditors is provided below: (` Cr) 31.03.14 31.03.13 a) Dues outstanding more than 45 days 0 0 b) Amount remaining unpaid as at the end of the year Principal Amount 0.11 0.09 Interest Amount 00 c) The amount of interest paid in terms of Section 18 along with the amounts of the -- payment made to the supplier beyond the appointed day during the year d) The amount of interest due and payable for the period of delay in making payment As per the terms of the Contract - - As specifi ed in the Act - - e) The amount of interest accrued and remaining unpaid at the end of the year 0 0
48th Annual Report 2013 - 14 50 MADRAS FERTILIZERS LIMITED
ix. OTHER DISCLOSURES i. Information required under AS 15 (Revised) on “Employee Benefi t Expenses” is provided in Annexure – I to this note. ii. The amount of borrowing costs capitalised for the year is ‘NIL’ (Previous year ‘NIL’) per AS 16 (Borrowing Costs). iii. Fertilizer manufacture is the only main business segment and trading operations are less than 10% of the total revenue. Further, the Company is engaged in providing and selling its products in single economic environment in India i.e., there is a single geographical segment. Hence, there is no requirement of segment reporting for the Company as per AS 17 (Segment Reporting). iv. During the year, there were no transactions with related parties as defi ned in AS 18 (Related Party Disclosures). The data relating to key managerial personnel is furnished under note 25. v. The Company has not entered into joint venture activities as defi ned in AS 27. Hence AS 27 on “Financial Reporting of Interest in Joint Ventures” is not applicable to the Company at present. vi. The movement of Provisions as required under AS 29 “Provisions, Contingent Liabilities and Contingent Assets” is given below : Mar 31, 2014 Mar 31, 2013 (` Cr) (` Cr) a. Leave Encashment Provision at the beginning of the year 10.23 9.40 Provision made during the year 5.84 4.44 Utilisation / withdrawal during the year 4.99 3.61 Provision at the end of the year 11.08 10.23 b Retired Medical Benefi ts Provision at the beginning of the year 1.04 1.33 Provision made during the year 0.19 0.11 Utilisation / withdrawal during the year 0.08 0.40 Provision at the end of the year 1.15 1.04 c. Service Awards Provision at the beginning of the year 0.25 1.26 Provision made during the year 0.05 0.07 Utilisation / withdrawal during the year - 1.08 Provision at the end of the year 0.30 0.25 d. Gratuity Provision at the beginning of the year 14.59 15.59 Provision made during the year 0.99 1.77 Utilisation / withdrawal during the year 4.44 2.77 Provision at the end of the year 11.14 14.59 e. Bad and Doubtful Debts Provision at the beginning of the year 4.47 4.78 Provision made during the year - - Utilisation / withdrawal during the year 0.01 0.31 Provision at the end of the year 4.46 4.47 f. Claims Recoverable Provision at the beginning of the year 1.01 1.01 Provision made during the year - - Utilisation / withdrawal during the year - - Provision at the end of the year 1.01 1.01
48th Annual Report 2013 - 14 51 MADRAS FERTILIZERS LIMITED
vii. A provision of ` 5.76 Cr towards Income Tax liability has been made during the year as the entire carried forward losses and unabsorbed depreciation available for set off have been fully wiped off. viii. The draft rehabilitation scheme (DRS) submitted by the Operating Agency to BIFR is presently under the perusal and consideration of GOI. The BIFR hearing scheduled to be held on Jan 13, 2014 stands postponed and the date for the next hearing is yet to be announced. ix. In respect of the verifi cation of movable fi xed assets, the outside professional fi rm of Chartered Accountants have submitted their fi nal report during the last week of March 2014. Management is reviewing the same along with the respective groups to identify the differences reported which is expected to be insignifi cant. After detailed verifi cation and reconciliation necessary adjustments if any, required will be made during 2014-15 with due approvals. x. Included in Short term Trade Payables under ‘Note 9a’ are: a. Dues to CPCL ` 93.37 Cr (Previous Year ` 95.68 Cr) for which mortgage and First charge on Guindy land is given for ` 100 Cr till the date of sanction of a rehabilitation scheme for the Company. b. Dues to IOC ` 43.61 Cr (Previous Year ` 49.67 Cr) for which First charge on Plant and Machinery is given for ` 50 Cr. xi. The Company defaulted repayment of loan principal and interest on GOI loans as detailed below:
(` Cr) Principal Interest Total Revamp Loans 122.30 91.03 213.33 Plan Loans 149.27 217.43 366.70 Non Plan Loans 20.77 21.29 42.06 Total 292.34 329.75 622.09
The same along with ` 32.68 Cr due within one year is shown under Note 9b – Other Current Liabilities.
48th Annual Report 2013 - 14 52 MADRAS FERTILIZERS LIMITED
Annexure-I Disclosure requirements under AS-15 (Revised) as per Note No: 24 B ix (i) Defi ned Contribution Schemes: The net amounts expended in respect of employer’s contribution to the provident fund and superannuation fund during the year, are ` 5.46 Cr (Previous year ` 5.01 Cr) and ` 6.00 Cr (Previous year ` 5.37 Cr) respectively. Defi ned Benefi t Schemes: Funded Scheme: (` Cr)
Gratuity Net employee benefi t Expense 2013-14 2012-13 Current Service Cost 0.72 0.65 Interest cost on benefi t obligation 2.50 2.54 Expected (return) / loss on plan assets (1.48) (1.39) Net actuarial (gain)/loss recognized in the year 0.95 (0.90) Net Benefi t Expense 2.69 0.90 Unfunded Schemes: (` Cr)
Earned Leave Post Retirement Service Award Net employee benefi t Expense Encashment Medical Benefi ts 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 Current Service Cost 1.45 1.30 0.01 0.13 0.02 - Interest cost on benefi t obligation 0.62 0.61 0.08 0.11 0.02 0.07 Net actuarial (gain)/loss recognized in the year 3.77 2.53 0.10 (0.40) 0.01 (0.36) Net Benefi t Expense 5.84 4.44 0.19 (0.16) 0.05 (0.29) Funded Scheme: (` Cr)
Gratuity Changes in present value of defi ned benefi t obligation 2013-14 2012-13 Opening defi ned benefi t obligation 31.26 31.74 Interest cost 2.50 2.54 Current service cost 0.72 0.65 Benefi ts paid (4.44) (2.77) Net actuarial (gain) / loss on obligation 0.95 (0.90) Closing defi ned benefi t obligation 30.99 31.26
48th Annual Report 2013 - 14 53 MADRAS FERTILIZERS LIMITED
Unfunded Schemes: (` Cr)
Earned Leave Post Retirement Service Award Changes in present value of defi ned benefi t Encashment Medical Benefi ts obligation 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 Opening defi ned benefi t obligation 10.23 9.40 1.04 1.33 0.25 1.26 Interest cost 0.62 0.61 0.08 0.11 0.02 0.07 Current service cost 1.45 1.30 0.01 0.13 0.02 - Benefi ts paid (4.99) (3.61) (0.08) (0.13) - (0.72) Net actuarial (gain) / loss on obligation 3.77 2.53 0.10 (0.40) 0.01 (0.36) Closing defi ned benefi t obligation 11.08 10.23 1.15 1.04 0.30 0.25 Funded Scheme: (` Cr)
Gratuity Change in fair value of plan assets 2013-14 2012-13 Opening fair value of plan assets 16.67 16.15 Expected return 1.48 1.39 Contributions 6.14 1.90 Benefi ts paid (4.44) (2.77) Actuarial gain / (loss) -- Closing fair value of plan assets 19.85 16.67 Investment details Insurer managed funds- 100% Funded Scheme: (` Cr)
Gratuity Balance Sheet 2013-14 2012-13 Defi ned benefi t obligation 30.99 31.26 Fair value of plan assets 19.85 16.67 Plan asset / (liability) (11.14) (14.59) Unfunded Schemes: (` Cr)
Earned Leave Post Retirement Medical Service Award Balance Sheet Encashment Benefi ts 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 Defi ned benefi t obligation 11.08 10.23 1.15 1.04 0.30 0.25 Fair value of plan assets ------Plan asset / (liability) (11.08) (10.23) (1.15) (1.04) (0.30) (0.25)
48th Annual Report 2013 - 14 54 MADRAS FERTILIZERS LIMITED
Funded Scheme: (` Cr)
Actuarial Assumptions Gratuity 2013-14 2012-13 Discount Rate (per annum) 8% 8% Rate of escalation in salary (per annum) 5% 5% Mortality table LIC 94 – 96 rates Expected rate of return on plan assets (per annum) 8% Unfunded Schemes:
Earned Leave Post Retirement Medical Service Award Actuarial Assumptions Encashment Benefi ts 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 Mortality table (before Retirement) LIC 94 – 96 rates Mortality table (after Retirement) Not Applicable LIC 96 – 98 rates Not Applicable Discount Rate (per annum) 9% Infl ation Rate (per annum) 6% 25. INFORMATION ON REMUNERATION TO DIRECTORS:
(`)
2013-14 2012-13 Salary and Allowances 32,95,923 29,67,255 Contribution to Provident & Other Funds 4,98,968 3,08,334 Other Perquisites 5,81,071 10,00,097 Total 43,75,962 42,75,686
Loans and Advances -- 26. INFORMATION ON GOODS MANUFACTURED AND TRADED: (a) Installed Capacities:
2013-14 2012-13 MT MT Ammonia 3,46,500 3,46,500 Urea 4,86,750 4,86,750 NPK 8,40,000 8,40,000 Bio fertilizers 400 400
48th Annual Report 2013 - 14 55 MADRAS FERTILIZERS LIMITED
(b) Production:
2013-14 2012-13 MT MT Ammonia 2,85,925 2,60,804 Urea 4,86,750 4,35,771 NPK 20-20-0-13 - - NPK 17-17-17 44,860 1,00,125 Bio fertilizers 147 378 (c) Purchase of Stock in Trade:
2013-14 2012-13 Quantity Amount Quantity Amount MT ` MT ` Agrochemicals - 1,30,93,995 - 98,50,813 Organic Manure 8,898 5,47,21,224 3,827 2,38,19,875 6,78,15,219 3,36,70,688 (d) Gross Sales:
Manufactured Products Urea 5,00,097 259,20,83,389 4,24,499 220,00,99,194 NPK 17-17-17 44,832 90,58,20,179 1,02,165 195,85,58,753 NPK 20-20-0-13 - - - - Carbon-di-oxide* 10,198 3,64,71,406 9,341 3,04,26,548 Bio fertilizers 147 43,92,333 378 1,13,77,722 Bought Products Agrochemicals - 1,94,46,562 - 1,45,92,625 Organic Manure 8,898 6,25,95,742 3,827 2,61,23,070 362,08,09,611 424,11,77,912 * By Product (e) Stocks:
(i) Opening Stock (a) Finished Products Manufactured Products Urea 3,698 15,21,79,757 61 23,38,880 NPK 17-17-17 11 2,81,906 2,143 6,31,18,036 NPK 20-20-0-13 0 8,555 0 9,430 15,24,70,218 6,54,66,346
48th Annual Report 2013 - 14 56 MADRAS FERTILIZERS LIMITED
(b) Work-in-Progress
2013-14 2012-13 Quantity Amount Quantity Amount MT ` MT ` Manufactured Products Ammonia 6,374 35,93,17,486 7,601 39,96,74,490 Urea – bulk 11,510 45,83,75,161 4,142 12,59,39,509 81,76,92,647 52,56,13,999 (ii) Closing Stock (a) Finished Products Manufactured Products Urea - - 3,698 15,21,79,757 NPK 17-17-17 3 91,201 11 2,81,906 NPK 20-20-0-13 0 8,555 0 8,555 99,756 15,24,70,218 (b) Work-in-Progress Manufactured Products Ammonia 4,863 30,72,32,183 6,374 35,93,17,486 Urea - bulk 1,537 6,79,90,793 11,510 45,83,75,161 37,52,22,976 81,76,92,647 (c) Stock Losses - Quantities reckoned in decretion in inventory 2013-14 2012-13 MT MT Urea 325 267 NPK 20-20-0-13 - - NPK 17-17-17 36 92
(f) Consumption 2013-14 2012-13 % Quantity Amount % Quantity Amount (i) Basic Raw Materials MT ` MT ` Imported Urea 12,375 29,79,27,346 27,481 66,88,00,696 Potash 14,084 39,54,60,808 30,245 83,32,42,358 Ammonium Sulphate - - - - Phosphoric Acid 7,887 39,97,66,005 17,857 95,61,56,431 Total 8 109,31,54,159 18 245,81,99,485 Indigenous Naphtha 2,10,754 1275,26,42,787 2,05,928 1140,80,39,453 Urea - - - - Others - 51,13,029 - 93,32,772 92 1275,77,55,816 82 1141,73,72,225 100 1385,09,09,975 100 1387,55,71,710
48th Annual Report 2013 - 14 57 MADRAS FERTILIZERS LIMITED
2013-14 2012-13 (ii) Components and Spares % ` % ` Imported 27 7,02,82,338 17 6,75,83,553 Indigenous 73 18,58,00,859 83 33,16,32,338 100 25,60,83,197 100 39,92,15,891
27. INFORMATION ON IMPORTS AND FOREIGN CURRENCY/EXCHANGE TRANSACTIONS:
(a) Imports (CIF Value) 2013-14 2012-13 ` ` (i) Raw Materials 75,89,58,536 197,16,92,048 (ii) Components and Spare Parts 13,81,72,834 19,03,40,446 89,71,31,370 216,20,32,494 (b) Other Expenditure incurred in Foreign Currency (i) Books and Periodicals 4,99,510 3,91,887 (ii) Travel (Business, Seminar, Conference etc.) - - 4,99,510 3,91,887
28. CONTINGENT LIABILITIES, CAPITAL COMMITMENTS AND L/Cs OUTSTANDING:
2013-14 2012-13 ` ` (a) Contingent Liabilities in respect of claims against the Company not acknowledged as 274,82,40,997 221,01,91,119 debts in respect of Income Tax, Excise Duty, Sales Tax and others (Includes Customs Duty on Imported Urea ` 65.86 Cr, Penal Interest on GOI Loans ` 181.35 Cr and interest on delayed payment of Excise Duty ` 5.42 Cr). (b) L/Cs outstanding (not provided for) 13,97,55,664 1,07,54,814 (c) Estimated amount of contracts remaining to be executed on Capital Account and not 11,20,56,347 6,55,30,814 provided for (after adjusting advance made therefor) (d) ESI Liability (interest) not provided for, based on Court’s interim injunction. 62,76,790 -
48th Annual Report 2013 - 14 58 MADRAS FERTILIZERS LIMITED
29. GENERAL INFORMATION: a. The appeal before the Commissioner of Customs (Appeals) against the demand of the Commissioner of Customs amounting to ` 65.86 Cr as differential duty including penalty is still pending. CESTAT has waived pre-deposit of the duty and penalty during the pendency of the appeal on deposit of ` 5 lacs by the Company which was complied with. b. Government of India has not so far exercised its right to levy penal interest amounting to ` 181.35 Cr (Previous Year ` 138.51 Cr). However, the same is shown under Contingent Liabilities per practice. c. Due to EU and US sanctions on Iran, the insurance companies could not get reinsurance abroad and consequently though the coverage for the year 2014-15 was given for the entire insured value of ` 1699 Cr, nevertheless the aggregate annual claim settlement shall be restricted to ` 160 Cr. The Company has taken up the issue with Department of Financial Services through Department of Fertilizers and the feedback is awaited. This note is provided per AS-4 (Contingencies and Events occurring after the Balance Sheet date). d. Out of the total Claims Recoverable of ` 1248 Cr pending as at the year end, ` 306 Cr has been received subsequently in the month of April 2014. Further an amount of ` 497 Cr was released to the Company vide Special Banking Arrangement approved by GOI as a loan by a consortium of Bankers. This amount has been subsequently discharged in full by GOI vide discharge letter dated April 02, 2014 as per the Special Banking Arrangement. Pending such discharge the above amount of ` 497 Cr has been reckoned as Claims Recoverable with corresponding amount payable to the consortium of bankers which is shown under Short term Trade payables - Unsecured. e. Con fi rmation of balances has not been received in respect of Loans from GOI, Trade Receivables / Payables and Loans and Advances. f. Figures for the previous year have been regrouped wherever necessary to conform to Current Year’s classifi cation.
/For and on behalf of the Board/
Dr. I VIJAYAKUMAR K.M. GUPTA V MURALIDHARAN Chairman and Managing Director Director General Manager - Finance & Accounts and Company Secretary
May 26, 2014
As per our Report of even date For B THIAGARAJAN & CO. Chartered Accountants FRN 004371S
CA RAM SRINIVASAN Partner May 26, 2014 M No 220112
48th Annual Report 2013 - 14 59 MADRAS FERTILIZERS LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2014 (` Crores)
2013-14 2012-13 CASH FLOW FROM OPERATING ACTIVITIES Profi t After Tax from continuing operations 100.04 24.44 Profi t After Tax from discontinuing operations - - Profi t After Tax 100.04 24.44 Non-cash adjustments to reconcile profi t after tax to net cash fl ows Depreciation 42.41 41.73 Loss/(profi t) from sale of Fixed Asset (0.48) (0.62) Interest Expenses 82.79 73.61 Interest Income (0.92) (1.35) Dividend Income (0.20) (0.20) Operating Profi t Before Working Capital Changes 223.64 137.61 Movements in working capital Increase/(decrease) in Trade Payables 456.55 (1.72) Increase/(decrease) in Long-term Provisions (1.50) (3.66) Increase/(decrease) in Short-term Provisions (0.94) 2.19 Increase/(decrease) in other Current Liabilities 54.64 34.74 Increase/(decrease) in other Long-term Liabilities - - Decrease/(Increase) in Trade Receivables 3.64 (3.65) Decrease/(Increase) in Inventories 83.75 (4.51) Decrease/(Increase) in Long-term Loans & Advances (3.83) 0.43 Decrease/(Increase) in Short-term Loans & Advances 3.37 (10.02) Decrease/(Increase) in other Current Assets (926.48) (148.65) Decrease/(Increase) in other Non-Current Assets - - Cash generated from / (used in) Operations (107.16) 2.76 Direct taxes paid (net of refunds) - - Net Cash Flow from / (used) in Operating Activities (A) (107.16) 2.76 CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (7.91) (31.08) Proceeds from sale of Fixed Assets 0.72 0.85 Interest Received 0.92 1.35 Dividend Received 0.20 0.20 Net Cash Flow from / (used) in Investing Activities (B) (6.07) (28.68)
48th Annual Report 2013 - 14 60 MADRAS FERTILIZERS LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2014 (Contd.,) (` Crores)
2013-14 2012-13 CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Issue of Share Capital - - Proceeds from Long-term borrowings - - Repayment of Long-term borrowings (32.69) (45.78) Proceeds from Short-term borrowings 191.07 38.14 Repayment of Short-term borrowings -- Interest paid (28.21) (17.73) Net Cash Flow from / (used) in Financing Activities (C) 130.17 (25.37) Net increase/(decrease ) in Cash & Cash Equivalents (A+B+C) 16.94 (51.29) Cash & Cash Equivalents as at 1st Apr (Opening Balance) 5.82 57.11 Cash & Cash Equivalents as at 31st Mar (Closing Balance) 22.76 5.82 COMPONENTS OF CASH AND CASH EQUIVALENTS Cash on Hand 0.07 0.07 With banks: on current account 0.02 1.06 on deposit account 22.67 4.69 Total Cash and Cash equivalents 22.76 5.82
/For and on behalf of the Board/
Dr. I VIJAYAKUMAR K.M. GUPTA V MURALIDHARAN Chairman and Managing Director Director General Manager - Finance & Accounts and Company Secretary
May 26, 2014
AUDITORS’ REPORT
We have examined the above cash fl ow statement of M/s Madras Fertilizers Limited for the year ended 31.03.2014. The statement has been prepared by the Company in accordance with the requirements of the listing agreement with the stock exchanges and is based on and derived from the Audited Accounts of the Company for the year ended 31.03.2014. For B THIAGARAJAN & CO. Chartered Accountants FRN 004371S
CA RAM SRINIVASAN Partner May 26, 2014 M No 220112
48th Annual Report 2013 - 14 61 MADRAS FERTILIZERS LIMITED
Information to Investors Some of the DP names are furnished under for your reference. Dear Shareholders You may contact nearest DP in this regard. Dematerilisation of Madras Fertilizers Limited (MFL) • Appollo Sindhoori Capital Investments Ltd Shares • Cholamandalam Securities Ltd As you may be aware that the shares of MFL are under • Fortis Securities Ltd compulsory dematerialisation (demat) segment of trading as per SEBI directives. This means, MFL shares can be purchased • Geojit Financial Services Ltd / sold at the Stock Exchanges only in demat form. Shareholders • HDFC Bank Ltd are therefore advised to avail the demat facility. • ICICI Bank Ltd Dematerialisation • IDBI Bank Ltd Dematerialisation is the process of converting physical share certifi cates into electronic form i.e. crediting of equivalent • India Infoline Securities P Ltd number of shares to your depository account electronically. • Indian Bank Depository Account • IndusInd Bank Ltd For dematerialisation of shares you have to open a depository • Integrated Enterprises India Ltd account with a Depository Participant (DP) having connectivity • Kotak Securities Ltd with National Securities Depository Ltd (NSDL) / Central Depository Services (I) Ltd (CSDL). You are free to open an • State Bank of India account with any of the DPs for demat. • Stock Holding Corporation of India Ltd Benefi ts of Dematerialisation • Union Bank of India • No risk of loss / misplacement / theft / damage of share • UTI Bank of India certifi cates • UTI Securities Ltd • No risk of bad deliveries • No stamp duty on transfer of shares In order to obtain the complete list of DP locations and other related information you may log on www.nsdl.co.in / www. • Faster transfer of shares cdslindia.com Steps involved for Dematerialisation of shares In case you need any additional information on this matter, 1. Open a demat account with any of the Depository please feel free to contact: Participants (DPs) Shri V. Muralidharan 2. Submit demat request form (DRF) (duly signed by all the General Manager - Finance & Accounts and Company Secretary holders) along with the share certifi cates to the DP. Madras Fertilizers Limited 3. Obtain acknowledgement from the DP for having delivered Manali, Chennai – 600 068 the share certifi cates Phone : 044 – 2594 5203 Fax : 044 - 2594 3613 4. Receive a confi rmation statement of holding from your DP. Email : [email protected] / [email protected] 5. PLEASE DO NOT SEND THE SHARE CERTIFICATES / DOCUMENTS FOR DEMAT TO THE COMPANY OR SHARE TRANSFER AGENT OF THE COMPANY
48th Annual Report 2013 - 14 62 Notes Notes Board of Directors
Dr. I VIJAYAKUMAR, IRS CHAIRMAN AND MANAGING DIRECTOR
Madras Fertilizers LImited, Manali Plant
SHRI RAJIV YADAV, IAS SHRI K.M. GUPTA, IES Additional Secretary and Financial Advisor, DOF Economic Advisor, DOF Executives of the Company
SHRI MOHAMMED HASSAN GHODSI SHRI AHMAD AZMOODEH SHRI MOHAMMAD ALI AHMADI NICO Director NICO Director NICO Director SHRI N MURALI KRISHNA, ITS Chief Vigilance Offi cer
SHRI C.M.T. BRITTO CA. MUKESH MOHAN GUPTA SHRI D SUNDARASEKARAN SHRI H GUNASEKARAN SHRI V MURALIDHARAN Director - Technical (Additional Charge) BIFR Nominee Director General Manager (Plant) General Manager (P & A) General Manager (F & A) and Company Secretary tthh 4488 AAnnualnnual ReportReport 22013-2014013-2014
MMADRASADRAS FERTILIZERSFERTILIZERS LLIMITEDIMITED